Supreme Court lets states charge internet retailers more in taxes

The Quill ruling had required businesses to collect state sales taxes only from residents of states where the business had a physical presence.

“To prepare, online sellers should perform a nexus “profile” immediately” by reviewing in which states they have online sales. Amazon does collect on direct sales, but not indirect sales.

South Dakota Gov. Dennis Daugaard called Thursday’s decision a “Great Day for South Dakota”, though the high court stopped short of greenlighting the state’s law.

Amazon isn’t the only Seattle company indirectly impacted by the Supreme Court decision.

“The question is, how much have we already gotten to?” said David Schumacher, director of the state Office of Financial Management. “Other states will have to enact statutes that incorporate economic nexus standards, and statutes take time”.

The case the court ruled in has to do with a law passed by South Dakota in 2016. “The Internet’s prevalence and power have changed the dynamics of the national economy”, he wrote in the majority opinion. More than 20 states define a seller’s physical presence as including any affiliated website.

South Dakota’s suit stemmed from a law requiring sales taxes for any out-of-state seller that delivers more than $100,000 worth of goods.

The biggest beneficiary of the ruling would be the states.

“So, we believe the answer to your question is no, not immediately”.

“It’s a great day for South Dakota and Main Street America”, said South Dakota Attorney General Marty Jackley.

The Trump administration and more than 40 states participated in oral arguments in the case, South Dakota v. Wayfair, asking the court to support South Dakota’s law that requires online retailers with a significant amount of business in the state to collect sales taxes.

After states and traditional retailers have grumbled about this situation for years, South Dakota finally made a decision to do something to change it.

In its challenge, South Dakota noted that “times have changed”, with online sales growing at four times the rate of total retail sales. “Remote sellers can avoid the regulatory burdens of tax collection and can offer de facto lower prices caused by the widespread failure of consumers to pay the tax on their own”. Legislative action has been stalled while the Supreme Court was deciding this case.

Brick-and-mortar stores could also see some gains, since no-online-taxes meant that goods were more expensive if you bought them at an actual store.

“It’s not as easy as pushing a button”, because businesses will need to make decisions about where they’re going to collect tax, Yesnowitz says.

I get it: You liked not having to pay sales tax on some of the things you bought.