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Supreme Court sides with online sales tax

22 June 2018

This overturns a decision from 1992 that mandated that states could levy taxes on businesses only if they had a brick-and-mortar presence within that state's borders. Justices determined that the presence rule was becoming "further removed from economic reality" every year, and that the costs of honoring sales taxes were largely disconnected from whether or not a company had a physical footprint.

The ruling is likely to lead other states to try to collect sales tax on purchases from out-of-state online businesses more aggressively.

Honestly, this shouldn't be surprising to anyone, but it's a bummer nonetheless.

The South Dakota law "applies to out-of-state retailers if they have more than $100,000 in sales or complete more than 200 transactions per year within South Dakota", Jackley's statement noted.

Richard Anklam, executive director of the New Mexico Tax Research Institute, described the ruling as "a favorable decision for the state, which has tried to achieve this result for quite some time". In a dissenting opinion, Chief Justice John Roberts argued that any rules that affect such a large portion of the economy should be legislated by Congress, not the courts. Kennedy argued that the explosive growth of online retail rendered the court's previous rulings outdated.

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The U.S. Supreme Court today handed down its anticipated decision in South Dakota v. Wayfair.

Smaller online companies are anxious about calculating taxes for literally thousands of jurisdictions.

The decision is largely viewed as a victory for states and local businesses. That has long meant cheaper online purchases with no sales tax to pay, especially on big-ticket items.

But a state finance official said the Department of Revenue does not anticipate taking any immediate administrative action or issuing additional guidance in light of the Supreme Court decision.

Now, states can push ahead with legislation requiring companies to collect and remit sales taxes for goods bought online elsewhere. Five states don't charge sales tax. The 5-4 decision in South Dakota v. Wayfair was a ruling with odd judicial bedfellows, and it means that sellers of goods and services online will now be responsible for collecting and sending taxes to the places where the buyers of those goods reside. Some people say shopping at a store has its advantages over online. He predicted the Legislature will attempt to clarify its own e-commerce-related tax laws in next year's session and said it was likely some e-retailers here would start voluntarily collecting sales tax in anticipation of those changes.

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"Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers", Kennedy wrote.

Now, with Amazon selling everything and Wal-Mart running Anita Ward choruses 24/7 about how they'll ship their stuff to your door, things have changed a bit, and the Supreme Court has ruled accordingly - overturning fifty years of precedent.

"There is nothing unfair about requiring companies that avail themselves of the States' benefits to bear an equal share of the burden of tax collection", Kennedy said. The money will flow straight to the local or state governments; Minnesota alone could net between $132 million and $206 million in revenue annually, according to a U.S. Government Accountability Office report that analyzed 2017 figures.

The South Dakota law and others like it could yet face legal challenges on other grounds.

The ruling comes against a backdrop of Trump's criticism of Amazon, the leading player in online retail, on the issue of taxes and other matters.

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Supreme Court sides with online sales tax