Supreme Court's online sales tax ruling gives states a win

Supreme Court rules that internet sales can be taxed by states

Shares in online retailers like Amazon.com (amzn), Wayfair (w), Etsy, (etsy) Overstock.com (ostk) and eBay (ebay) all fell in the wake of the decision.

One thing's for sure: Consumers who live in one of the five states without a sales tax won't be affected by the Supreme Court's ruling.

The Supreme Court ruled today states can now require online retailers to pay sales tax.

Critics of the decision said it would unduly burden and harm small businesses, which the majority acknowledged was possible.

Some major online retailers, such as Amazon, have already agreed on their own to collect sales tax nationwide.

Rob Karr, president and CEO of the Illinois Retail Merchants Association, praised the decision, saying it "levels the playing field for bricks-and-mortar stores".

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In a 5-4 decision, the court overturned decades-old decisions blocking states from taxing online purchases if the vendor had no "physical presence" in that state, according to The Associated Press. North Dakota, which established the physical presence test for sales and use tax nexus. "So, by relying on a sales tax, you have to make sure it's modern and up to date".

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", he wrote in an opinion joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch. In many states, individual consumers were the ones legally responsible for paying sales tax for purchases where they were not charged, but those laws were rarely, if ever, enforced. The estimate represented between 2 and 4 percent of total state and local sales tax collections in 2016, the analysts said. All Florida taxpayers will benefit from today's ruling, which will bring equity and fairness to Florida's sales and use tax.

Collecting taxes on all e-commerce sales "will likely prove baffling for many retailers", Roberts said.

"Amazon's third-party business should be minimally affected in the long term from states imposing taxes on online sales, as the impact is equal across the e-commerce ecosystem." said Jitendra Waral, an analyst at Bloomberg Intelligence.

South Dakota, which does not have an income tax, enacted a law that deliberately challenged the requirement and local officials are calling its victory in the high court a win for all states. "The current tax system favors online retailers over brick-and-mortar businesses, and undermines fair and open competition in the marketplace", wrote the National Retail Federation in a statement.

In the new case, South Dakota v. Wayfair, South Dakota had attempted to overturn that precedent, arguing that Quill was decided before the existence of internet commerce.

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