SCOTUS Taxes

In Major Ruling, SCOTUS Decides That States Can Mandate Sales Tax From Online Retailers

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In a 5-4 ruling Thursday, the Supreme Court of the United States overturned a 1992 decision that prevented states from requiring sales taxes from online retailers. The majority—which included Anthony M. Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch—decided that major technological advancements since the early 1990s require a change of law to reflect present day reality.

The majority opinion, written by Kennedy, addressed the unfair advantage that major online retailers have over traditional brick and mortar stores, who have no recourse for state sales taxes. The opinion reads that “the continuous and pervasive virtual presence of retailers today is, under [the 1992 ruling] simply irrelevant. This court should not maintain a rule that ignores these substantial virtual connections to the state.”

The ruling emerged from a challenge filed by South Dakota. While many online retailers already offer to collect taxes on digital sales, certain companies do not, including Overstock, Wayfair, and Newegg. The ruling could result in states collecting billions of dollars of unpaid sales taxes.

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