How Supreme Court tax ruling could affect states, small businesses - and you

Supreme Court ruling allows Louisiana, other states to collect sales tax from online shoppers

Supreme Court decides online sales tax issue

He also called it a "Great victory for consumers and retailers", though consumers will ultimately be paying more and businesses weren't uniformly cheering the decision.

"It's disappointing to have to turn away business", Gendelman said, "but the Supreme Court hasn't left us much choice". The decisions made it more hard for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action. Now, rivals will be charging sales tax where they hadn't before.

"The internet's prevalence and power have changed the dynamics of the national economy", Justice Anthony Kennedy wrote in the majority opinion. He was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch.

"From my perspective, we don't always know what we are going to sell in South Dakota", Gendelman said.

The court said that law effectively incentivized businesses to "avoid physical presence" in states and led to "a judicially created tax shelter".

Trump has repeatedly made clear that he thinks online retailers should collect sales taxes.

In the scenario where a New Yorker buys an OR bike, Lehner said it's important to understand that if it was purchased through a large online retailer like Amazon, the likelihood is that the sales tax would have been paid anyway. "The expansion of e-commerce has also increased the revenue shortfall faced by states seeking to collect their sales and use taxes, leading the South Dakota legislature to declare an emergency". North Dakota decision, which ruled that companies need to have at least some physical connection with a state for that state can require that company to pay taxes. "Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor.

The case the court ruled on involved a 2016 law passed by South Dakota, which said it was losing out on an estimated $50 million a year in sales tax not collected by out-of-state sellers.

The burden will fall disproportionately on small businesses.

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.

"Will states step forward and pass laws similar to South Dakota?" asked Annette Nellen, director of the Masters in Science in Taxation program at San Jose State University, on Thursday.

"Distortions caused by the desire of businesses to avoid tax collection mean that the market may now lack storefronts, distribution points and employment centers that otherwise would be efficient or desirable", he said.

Big Supreme Court win on internet sales tax - about time!

"Generally of the opinion that it's not going to have a major impact on the larger e-commerce companies as many have already been collecting state sales tax for years", wrote one venture capital investor whose firm is heavily invested in e-commerce. "Today's decision is welcomed by Main Street grocers, as it helps assure a more level playing field between Main Street brick-and-mortar and out-of-state e-commerce merchants", unusual said. Many argued Congress should set up standardized rules to simplify tax collection requirements. "One vitalizing effect of the Internet has been connecting small, even "micro" businesses to potential buyers across the nation", he wrote, adding, "The court's decision today will surely have the effect of dampening opportunities for commerce in a broad range of new markets".

Latest News