Supreme court rules states can collect sales tax from online retailers

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

SHOPPINGSupreme Court rules states can force online shoppers to pay sales taxSHARE:sharetweetshareemail none

The court on Thursday decided in favor of states in South Dakota vs. Wayfair, a direct challenge to a 1992 decision in Quill Corp. vs.

Online shoppers could find costs going up after the Supreme Court did away Thursday with a decades-old precedent limiting the ability of states to collect sales tax on certain out-of-state Internet purchases.

The U.S. Supreme Court today handed down its anticipated decision in South Dakota v. Wayfair. The decisions made it more hard for states to collect sales tax on certain online purchases. North Dakota, that states could not extend their taxing authority to companies that had no stores, warehouses or "physical presence" within the state. Customers were generally supposed to pay the tax to the state themselves if they were not charged by the merchant, but the vast majority of consumers did not.

Shares of Amazon, Overstock.com, Etsy, Wayfair and other retailers fell after the ruling was announced.

Brick-and-mortar retailers in states are required to collect taxes on a state's behalf.

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Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. It's likely to negate some of the price advantages that come from buying online, as you might guess, but there's also the possibility of creating headaches for smaller e-commerce outfits that might lose a price advantage over heavyweights already paying state sales taxes.

As an example, lawyers for the online retailers told the high court that in IL, a Snickers bar costs more in taxes than a Twix bar, since food items containing flour are not treated as candy for tax purposes. The conservative chief justice, John Roberts dissented along with liberals Stephen Breyer, Sonia Sotomayor and Elena Kagan.

South Dakota was backed by President Donald Trump's administration in the case.

Retailers said overturning Quill would allow states to go far beyond the model legislation that South Dakota passed, requiring collection by retailers with a single sale in a state or perhaps trying to force the companies to comply retroactively.

Amazon's stock is down almost a percent since the announcement, Etsy is down 3.12 percent.

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