Internet sales-tax ruling could have big effect in Florida

Pool  Getty Images

Pool Getty Images

The court ruled that businesses can be required to collect sales taxes even when they don't have a physical presence, such as a warehouse or office, in the state where the purchase is made.

The Trump administration backed South Dakota in the case, arguing that no one could have foreseen how rapidly e-commerce would expand.

A November 2017 report by the U.S. Government Accountability Office estimated that MA could gain an estimated $169 million to $279 million in additional tax revenue if it could tax all remote sellers.

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.

But even with the court's decision, not all remote sales are likely to be taxed. It treats economically identical actors differently for arbitrary reasons.

"There was a time when we wanted the United States, as a matter of policy, to protect nascent internet businesses by keeping down the tax burden, but that time is long gone", he said. The 5-to-4 decision reversed decades-old decisions that protected out-of-state vendors from sales tax obligations unless the vendor had a physical presence in the state. "It is essential to public confidence in the tax system that the Court avoid creating inequitable exceptions".

Congress protected those Internet sellers in 1998 legislation that has since been made permanent. Justices Ruth Bader Ginsburg, Clarence Thomas, Samuel Alito and Neil Gorsuch joined his opinion. The dissenting opinion was written by Chief Justice John Roberts, joined by Stephen Breyer, Sonia Sotomayor, and Elena Kagan. The next step will be to see how strictly the courts interpret this ruling, specifically, whether it would allow states to force retailers to also pay excise taxes-also known as OTP taxes-on products. Big-box retailers like Walmart, Target, and Costco, on the other hand, recorded modest gains.

Although consumers have in theory always been liable for paying sales tax to their state and municipality for online orders, the reality is very different.

Some members of Congress objected to the decision. Bob Goodlatte (R-Va.), Anna Eshoo (D-Calif.), and Jim Sensenbrenner (R-Wis.).

Although many state legislatures are wrapping up for the year, the Government Finance Officers Association's Emily Brock says some may reconvene.

The Supreme Court dropped a major bomb on American business today.

"Today's decision culminates years of tireless work by the retail community to reverse a pre-internet era rule that distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts". After doing so, it filed a lawsuit against Newegg,, and Wayfair to validate the law. While retailers were not required to collect sales tax, that tax was technically still owed. "These issues are not before the Court in the instant case; but their potential to arise in some later case can not justify retaining this artificial, anachronistic rule that deprives States of vast revenues from major businesses". But others have resisted, making Thursday's decision significant.

Etsy said it hopes that Congress will "create a simple, fair federal solution for microbusinesses", like the people who sell items on Etsy's platform. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and send it to the state.

Latest News