US Supreme Court Agrees with States on Collection of Online Sales Tax

Tuesday, 26 Jun, 2018

The tax is 6.25 percent.

Although it is the poster child for big e-commerce, Amazon wasn't involved in the lawsuit and the immediate decision doesn't affect the company dramatically. "Wayfair has long supported a legislative solution that would establish a level playing field for brick-and-mortar and online retailers by permitting states to collect sales tax on online sales". "The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it's time for outdated sales tax policies to change as well. Great victory for consumers and retailers".

The high court ruled Thursday to overturn those decisions.

The Supreme Court overrules the Quill case, which previously set the precedent for collecting sales tax from online sellers. Then we have a handful of states who don't even charge sales tax at all.

The court, in a ruling authored by Justice Anthony Kennedy, revived a 2016 South Dakota law that required larger out-of-state e-commerce companies to collect sales tax, a mandate that the online retailers fought in court.

This law affects IL shoppers that check out of shopping sites without paying sales tax, and the sites are now required to add them.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States". He argued that the rule "limited States' ability to seek long-term prosperity and has prevented market participants from competing on an even playing field". Local brick-and-mortar businesses, important clients of commercial real estate practitioners, find themselves at a tremendous disadvantage when forced to collect taxes that online retailers are not. "We want to make sure when we do levy taxes that they're levied in a fair and equitable manner", Blair said. Otherwise, they didn't have to collect the state's sales tax.

It is also unclear, according to Montana Department of Revenue Officials, if the court's ruling could mean that Montana's resort communities which have adopted a local option sales tax will have to start imposing those taxes on their online sales. It will also directly affect sellers hocking their goods on Amazon.

Montana is one of five states without a general sales tax, and this ruling will only impact businesses that sell online with out-of-state customers.

The Illinois law takes effect on October 1, and it's built on legislation passed in South Dakota that is the focus of the recent Supreme Court decision.