Supreme Court's Wayfair tax decision sidelines Quill

Supreme Court Rules for States in Online Sales Tax Case

Supreme Court rules states can force online retailers to collect sales tax

But the practical effect in MA may be more about providing clarity than gaining any substantial new revenue, since MA already started collecting taxes from online sales previous year - despite a lawsuit challenging those collections. Now, under this new decision, even if a company doesn't have a store, warehouse, or office in a state, its internet sales to that state's residents can be taxed.

The current situation where billion-dollar companies don't pay state tax is actually damaging to the overall economy and states, the court's majority opinion argued.

The Jewelers Vigilance Committee sent out a note reminding members that "internet retailers who make sales in states where they have no physical location should now check for state laws that require them to collect sales tax for those states".

"Consumers are used to paying sales tax, so no big deal", Tim Bajarin, principal analyst with Campbell-based Creative Strategies, a market researcher, said Thursday. Justices Ruth Bader Ginsburg, Clarence Thomas, Samuel Alito and Neil Gorsuch joined his opinion.

The states that are likely to see the biggest percentage increase in revenue are Louisiana, Tennessee, South Dakota, Oklahoma and Alabama, according to the Barclays research.

States have long complained that they were losing millions in tax revenue, while giving online retailers an advantage over brick-and-mortar shops. Forty-five of the 50 states impose sales taxes on purchases.

South Dakota's law applies only to those businesses with more than $100,000 in sales, or at least 200 transactions, in the state each year. Amazon collects state sales tax on items it sells directly, but third party vendors on Amazon are now not required to collect the tax.

Until now, many sellers that have a physical presence in only a single state or a few states have been able to avoid charging sales taxes when they ship to addresses outside those states. States could enact minimum sales thresholds for triggering the online tax collection.

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The online stores have contended that charging sales tax would be "burdensome" for small- to mid-sized shops. "This decision finally levels that playing field, and I think that's all any business owner wants".

"The chessboard just looks a lot different now", said Stephanie Martz, general counsel for the National Retail Federation, which includes 18,000 businesses large and small. Quill determined how state taxes worked with e-commerce from the web's first days. That software, too, can be an added cost.

The group described the decision as a "body blow" to customers and small online businesses.

"Ecommerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule". Chief Justice John Roberts dissented, saying the decision should be left to Congress, and was joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.

The 5-4 decision is expected to help states collect billions more in revenue each year. Home goods seller Wayfair and other e-commerce companies had attempted to challenge a South Dakota law that levies taxes on purchases made through certain online retailers.

The court held that its prior "physical presence rule" was "unsound and incorrect" and so prior decisions from 1967 and 1992 were both overruled.

The majority agreed that South Dakota's argument for an economic presence - not a physical one -should be the basis for taxing a sale.

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