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Supreme Court decides online sales tax issue Florida retailers cheer Supreme Court online sales tax decision
Pete Mitchell | 22 June, 2018, 18:28

The case decided was South Dakota v. Wayfair; South Dakota was suing Wayfair, an e-commerce retailer that does not collect state taxes.

Before this ruling, online retailers had to have a physical presence in a state to be subjected to that state's sales tax. That physical presence standard was just overturned by the Supreme Court in the case South Dakota v. Wayfair, by a 5-4 decision.

"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.

Stocks of online retailers were down significantly immediately following the ruling.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel of the Retail Industry Leaders' Association.

In a statement, Florida TaxWatch said it "enthusiastically applauds today's Supreme Court ruling, which will (also) have a positive impact on Florida jobs". North Dakota, which said mail orders from out-of-state companies didn't have to add sales tax. "CCIA has serious concerns about the future implications for e-commerce if governments are empowered to tax those who reside beyond their borders".

However, Amazon only collects sales taxes on its third-party sellers for two states, Washington and Pennsylvania.

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The court decision was praised by Florida business groups.

Big Apple online shoppers were technically supposed to pay the sales tax themselves if a retailer did not collect it.

Until now, many sellers that have a physical presence in only a single state or a few states have been able to avoid charging sales taxes when they ship to addresses outside those states. As part of an ongoing spat with Amazon's owner, Jeff Bezos, President Donald Trump has repeatedly accused the online retail giant of dodging taxes and putting physical retailers out of business. Five states don't charge sales tax.

In the majority decision, Justice Anthony Kennedy noted that the realities of consumer habits have changed drastically since the 1992 decision. Chief Justice John Roberts wrote a dissenting opinion. "Big victory for fairness and for our country".

State and local governments had grown increasingly agitated as sales from brick and mortar retailers gave way to online retail, which now comprises approximately 9.5% of the dollar value of total purchases. He also had supported Nebraska joining with 33 other states and the District of Columbia a year ago in supporting South Dakota's case before the high court. Now, some companies had, like Amazon had been remitting the sales tax to us already on internet sales.

Sellers that use eBay and Etsy, which provide platforms for smaller sellers, also haven't been collecting sales tax nationwide.

"This is a great day for South Dakota".

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