SCOTUS rules states can collect taxes from online shopping transactions

SCOTUS rules states can collect taxes from online shopping transactions

SCOTUS rules states can collect taxes from online shopping transactions

According to the General Accountability Office, prohibitions against collecting sales taxes from online retailers cost states as much as $13.4 billion previous year. The attorney general of South Dakota, who defended a state rule that required out-of-state retailers to collect state taxes, said the decision is a win for the state and small businesses. Matt bought has a Syracuse gnome thta he bought online, and since the store has no physical presence in Arizona, he didn't have to pay sales tax.

The Supreme Court has overruled a 1992 decision that prevented states from requiring businesses to collect sales taxes if they didn't have a physical presence in the state, The New York Times reports. Kennedy also said that the rule makes no sense, and that "this Court should not maintain a rule that ignores these substantial virtual connections to the State". As part of an ongoing spat with Amazon's owner, Jeff Bezos, President Donald Trump has repeatedly accused the online retail giant of dodging taxes and putting physical retailers out of business.

"Between targeted advertising and instant access to most consumers via any internet-enabled device, a business may be present in a state in a meaningful way without that presence being physical in the traditional sense of the term", Justice Anthony Kennedy wrote in his opinion.




Justice John Roberts Jr. wrote the dissent. Customers were generally responsible for paying the sales tax to the state themselves if they weren't charged it, but most didn't realize they owed it, and few paid.

The Supreme Court agreed to overturn those decisions in a 5-4 ruling.

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. By early 2017, Amazon was collecting sales taxes in all states that have sales taxes, but it was doing so only for merchandise it sells directly, not for merchandise other retailers sell on its platform. South Dakota's governor has said his state loses out on an estimated $50 million a year in sales tax that doesn't get collected by out-of-state sellers. The Supreme Court heard the case in April of this year and decided in South Dakota's favor. "This decision will allow states the ability to level the playing field for all retailers". The law applies to out-of-state retailers if they have more than $100,000 in sales or complete more than 200 transactions per year within South Dakota. Avalara helps companies around the world comply with sales tax laws using automation software.

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