What Online Retailers Say About the Supreme Court's Tax Ruling

What Online Retailers Say About the Supreme Court's Tax Ruling

States may force online retailers to collect potentially billions of dollars in sales taxes, the U.S. Supreme Court said in a major ruling on Thursday that undercut an advantage many e-commerce companies have enjoyed over brick-and-mortar rivals. 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 case is South Dakota v. Wayfair. The decision reverses a 1992 Supreme Court ruling in Quill vs.

The ruling is sure to elate the state's small retailers. But as the e-commerce platform has evolved, more of the larger online retailers have begun paying sales taxes - about 90 percent of the revenue owed.

Amazon isn't the only Seattle company indirectly impacted by the Supreme Court decision. It treats economically identical actors differently for arbitrary reasons.

The matter reached the Supreme Court after South Dakota in 2016 passed a law requiring out-of-state sellers to collect and remit sales taxes, provided the total sales exceeded $100,000 or at least 200 transactions.

The court decision could also be important in Florida because of the state's heavy reliance on sales-tax revenue.

As he noted, the online retail industry has thrived up until now based on the existing rules regarding sales taxes. "It is essential to public confidence in the tax system that the Court avoid creating inequitable exceptions".

As part of the decision, Justice Anthony Kennedy, who wrote for the majority, pointed out how much the landscape has chanced since 1992. Justices Breyer, Sotomayor, and Kagan signed on to Chief Justice Roberts' dissent.

Bloomberg reported that the stocks of Amazon, Wayfair, Etsy, and eBay all fell following the ruling. For decades, these sales tax laws were only applicable on purchases that were made from retailers who had a physical presence within that state.

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President Donald Trump has also criticized Amazon, whose founder Jeff Bezos also owns the Washington Post, saying that it does not collect any sales tax.

Some members of Congress objected to the decision.

Rep. Annie Kuster, D-N.H., said "this misguided ruling will subject them (small businesses) to thousands of taxing jurisdictions and burdensome red tape across the country". That drop eliminated all the gains Overstock enjoyed after it started accepting Bitcoins a few weeks ago which the e-tailer claimed increased sales by over 10%. "Today's landmark decision is a win for South Dakota and for Main Street businesses across America that will now have a level playing field and tax fairness", Jackley said.

The 5-4 opinion, "threw out a precedent that had blocked online sales taxes", Axios explained.

It is not clear how long it might take for online sales taxes to apply universally, or whether new state legislation would be required to implement it in Maryland or Virginia.

In addition, smaller online firms will now be at a disadvantage, not only with local brick-and-mortar businesses that only have to comply with one state's sales-tax laws, but against online giants that can easily absorb the extra compliance costs.

The law went into effect on January 1, said Anna Gill, a spokeswoman for the state Department of Revenue.

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