Supreme Court rules states can force online shoppers to pay sales tax

Yuri Gripas  Reuters

The high court ruled Thursday to overturn those decisions. "In effect, it is a judicially created tax shelter for businesses that limit their physical presence in a State but sell their goods and services to the State's consumers, something that has become easier and more prevalent as technology has advanced".

Attention shoppers: You may soon be paying more taxes on what you put in your online cart.

Gov. Justice says this is a legislative issue that would have to be passed for the state to enforce the collection of out-of-state sales taxes. Lawmakers have avoided the issue for years, in part because they didn't want to be seen increasing taxes, but the court's decision may give them cover to finally establish a coherent set of rules.

The decision came on a South Dakota suit against Wayfair.com, with the state claiming that the company should collect sales taxes on sales in the state.

Justices Anthony Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch delivered the opinion while John Roberts, Stephen Breyer, Sonja Sotomayor, and Elena Kagan dissented.

Or, it could raise little new money for the state.

Owners who have never collected out-of-state sales tax will need to get up to speed. And it is a member of the Streamlined Sales and Use Tax Agreement (SSTA), an interstate compact under which 21 states have agreed to adopt uniform rules about various aspects of their sales taxes. USA Today points out that most of the top 20 e-commerce sellers already collect sales taxes in most states because they have warehouses or local showrooms there or because state laws can successfully reach them. "The largest physical retailers are now also the largest online retailers". Betty Lou Kranz initially anxious about being able to stay in business if she had to track tax rates in hundreds of jurisdictions where her Port Jervis, New York-based company, The Pretzel Princess, sells candy and snacks.

Blue Nile did not respond to a request for comment on how the ruling would affect its business.

Vermont has already made efforts to collect sales tax on online sales. This will be a huge boost to state budgets, but online retailers won't be pleased. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and send it to the state.

"In light of internet retailers' pervasive and continuous virtual presence in the states where their websites are accessible, the states have ample authority to require those retailers to collect state sales taxes owed by their customers", U.S. Solicitor General Noel Francisco said in a friend-of-the-court brief. Small businesses may have to figure out how to comply with various state sales tax laws, though there are software options to help.

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