Supreme Court Ruling Opens Door to Online Sales Tax

Daniel Fowler
June 23, 2018

In doing so, the court reversed a 1992 ruling that allowed states to levy taxes only on those businesses with a brick-and-mortar location within the state. The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect the state's sales tax.

A U.S. Supreme Court ruling on Thursday that paved the way for states to levy sales taxes on online purchases could have big ramifications in New Mexico - for shoppers, local retailers and the state's coffers.

Amazon, Shopify (SHOP), Etsy (ETSY) and Wayfair and other e-commerce stocks all were down.

According to the General Accountability Office, prohibitions against collecting sales taxes from online retailers cost states as much as $13.4 billion a year ago. Oklahoma could also see a sizeable 2.7 percent gain, Barclays found.

Strategic Resource Group's Burt Flickinger on the Supreme Court ruling that states can collect sales tax on out-of-state purchases.

Currently, more than 230 out-of-state, online vendors are signed up for the Simplified Sellers Use Tax program in Alabama.

Some small businesses worry that their online sales will become overly complex if they have to collect sales taxes for many states. Many argued Congress should set up standardized rules to simplify tax collection requirements.

Today's ruling caused publicly traded e-commerce companies share prices to tumble, with Shopify, Etsy, Amazon, eBay, Alibaba all recording losses in midday trading on their respective US exchanges.

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Under the ruling Thursday, states can pass laws requiring out-of-state sellers to collect the state's sales tax from customers and send it to the state.

The U.S. Supreme Court is seen as the court nears the end of its term in Washington, U.S., June 11, 2018.

"From my perspective, we don't always know what we are going to sell in South Dakota", Gendelman said.

Georgia residents will have to pay sales tax on almost all online purchases following a U.S. Supreme Court decision Wednesday in a South Dakota case.

The Supreme Court ruled that states can require online businesses to collect sales tax, even if that business doesn't have a physical footprint there.

In 2016, South Dakota enacted legislation that was clearly unconstitutional by Quill standards. She says the court decision will "level the playing field for IL brick-and-mortar retailers". "The Court should not act on this important question of current economic policy, exclusively to expiate a mistake it made over 50 years ago", Roberts said. That led to the legal challenge of Quill Corporation v. "Last year, e-commerce retail sales alone were estimated at $453.5 billion".

"Consumers will quickly feel the negative effects as those businesses dry up or are forced into the arms of Internet giants", he added. "Clearing this hurdle puts Oklahoma in a position to collect much-needed new revenue to fund core government services". Lawmakers in the state, which has no income tax, passed a law created to directly challenge the Supreme Court's 1992 decision. In South Dakota alone, a state with a population of less than 1 million people, The Department of Revenue estimates that the state government could take in up to $58 million annually.

The 5-4 ruling called the current rules "unsound and incorrect".

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