The court said states can collect sales taxes directly from sellers outside their borders, unlocking hundreds of millions of dollars in tax revenue and leveling the playing field for brick-and-mortar stores.
The effect is expected to be positive and widespread because 45 states impose sales taxes and until now were barred from requiring those companies to collect remote sales taxes. NY taxes shower caps and walking boots, but not swimming caps or hiking boots, says Avalara (AVLR), which makes automated tax software.
"As in so many other areas, technology has evolved faster than the law and left us with at times freakish, unfair results", she said.
South Dakota concluded in 2016 that the explosion in online sales changed the market dramatically.
On Thursday the Supreme Court reversed more than half of a century of precedent.
In New York, for example, clothing and footwear costing less than $110 is exempt from state sales tax, but not in some local jurisdictions. Maggie Hassan, D-N.H.
On Thursday, June 21, the Supreme Court voted in favor (5-4) of allowing states to require online buyers pay sales tax no matter what site they're shopping at.
But many online sellers, such as Etsy or EBay, that serve as a third party portal for thousands of small homegrown businesses that do not pay sales taxes, point to confusing tax rules that could expose them to costly audits for any revenue shortfall.
"Correctly calculating and remitting sales taxes on all e-commerce sales will likely prove baffling for many retailers".
It is true that some states have tried to simplify their sales taxes to reduce compliance costs.More news: Denmark held to a draw against Australia
Fox added that the case before the Supreme Court involved larger companies, and small businesses may not have a tax collection responsibility.
In giving a victory to the states, the high court said that rule is outdated. Companies like Amazon, B&H Photo and eBay will be among the most affected. Amazon was among the biggest drags on the benchmark S&P 500 stock index. A few years later, in 1998, Congress effectively codified the Court's "physical presence" standard into law.
Retailers with physical storefronts celebrated the decision, as did the National Retail Federation, a trade group comprised of some of the biggest brick-and-mortar retailers in the US.
For some, online shopping was a way to buy things without needing to drive to a brick and mortar store to make the purchase.
Small online businesses will be the hardest hit, said Chris Cox, a lawyer for e-commerce industry group NetChoice.
The case is South Dakota v. Wayfair, 17-494.
It's now up to individual states to determine whether their laws fall within those and other limits outlined in Thursday's ruling. That won't necessarily be the case at Amazon, the world's largest online retailer, which already collects sales tax in every state that has such a tax. So you might have to start paying sales tax alongside those non-Prime shipping charges.
For states, the court's ruling in South Dakota v. Wayfair ends a decadeslong lobbying and legal fight and begins a new round of regulations, legislation and enforcement.
Writing the majority opinion, Kennedy called the previous ruling in Quill "flawed" and "removed from economic reality".
A new CT law goes into effect at the end of this year to collect taxes from some online retailers.
Trump has blasted Amazon CEO Jeff Bezos, who also owns the Washington Post, a newspaper that the Republican president has disparaged for its coverage of him.