The Supreme Court just caused stocks of online retailers to tumble

Doris Richards
June 27, 2018

The 5-4 decision overruled two previous Supreme Court decisions that said if a business was shipping a purchase to a state where the business didn't have a physical location, the business didn't have to collect a sales tax from the state.

In today's decision, authored by Justice Anthony Kennedy, the Court sided with South Dakota, which had passed a law in 2016 that required large out-of-state online retailers to collect sales taxes on merchandise sold in the state.

How will this affect your wallet?

Buyers have to pay sales tax if they are shopping from a big box store online because many have stores in every state.

South Carolina's main retail association said the state could collect an added $250 million a year in tax revenue - money from S.C. shoppers that could be used to hire school resource officers, retain teachers or fill vacancies at understaffed state agencies.

"The physical presence rule has "been the target of criticism over many years from many quarters, '" the majority wrote". However, smaller e-tailers like Newegg used to have a no-tax advantage.

"I think the sales tax news is really significant", said Rep. Cynthia Browning, D-Arlington, a member of the House Ways and Means Committee. In areas where there is a local 1 percent option tax, retailers will be required to collect that as well.


David Campbell, CEO of TaxCloud, one of the companies that manufactures tax compliance software, also noted that how long it may take for states to weigh in isn't known, since some have part-time legislatures.

"At this time, the Department is reviewing the ruling and its impact on Florida sales tax", a Revenue spokeswoman said.

IL positioned itself for this moment by passing a law in May that calls for online retailers - regardless of their presence in the state - to begin collecting IL sales tax beginning October 1. The old rule effectively blocked states from collecting form consumers. "We want to make sure when we do levy taxes that they're levied in a fair and equitable manner", Blair said.

Already, South Carolina expects to collect about $346 million in sales taxes from online sales in 2017-18, according to an October analysis by the state's Revenue and Fiscal Affairs Office. Brick and mortar retailers and state lawmakers have been lobbying for decades to reverse a 1992 ruling in Quill Corporation v. "We are proud to have been a part of the effort that resulted in yesterday's decision". The problem isn't the tax rates, but rather the administrative burden that goes with collecting and paying those sales taxes.

The judgement levels the playing field between online and physical retailers and offers relief for USA states looking for additional revenue.

The National Retail Federation called the decision "a major victory" for retailers.

Other reports by Iphone Fresh

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