Supreme Court Decides Wayfair Online Sales Tax Case

Supreme Court Decides Wayfair Online Sales Tax Case

The Supreme Court on Thursday reversed course on a ruling that dates to the mail-order catalogue era known as Quill that limited states to collect sales taxes only from retailers that have a physical presence, or "nexus", in a particular state to require that company to collect sales taxes from its customers.

Now, with Amazon selling everything and Wal-Mart running Anita Ward choruses 24/7 about how they'll ship their stuff to your door, things have changed a bit, and the Supreme Court has ruled accordingly - overturning fifty years of precedent.

Previously, companies without a physical presence in a state were exempt from sales tax collection requirements.

The court chose to overturn a 1992 decision that a physical presence was necessary to require retailers to collect and send sales taxes to a state.

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One of the big advantages online retailers have had over your local shop is a lack of sales tax. But half of Amazon's sales are from third-party Marketplace sellers, who for the most part don't collect sales taxes.

Amazon has been collecting sales taxes in all states that have the tax since April 2017 and in many states - including Texas - much earlier. Large retailers including Apple, Macy's, Target and Walmart, which have brick-and-mortar stores nationwide, already generally collect sales tax from their customers who buy online. Chief Justice John Roberts wrote a dissenting opinion. Major online retailers such as Wayfair, Overstock, eBay, Shopify and Etsy, opposed the law change.

As an example, lawyers for the online retailers told the high court that in IL, a Snickers bar costs more in taxes than a Twix bar, since food items containing flour are not treated as candy for tax purposes.

In response to the ruling, the stocks of several internet retailers, including Amazon, eBay and Wayfair, all dropped. Forty-five of the 50 states impose sales taxes. In what has been called the "tax case of the millennium" by the National Conference of State Legislatures, South Dakota sued Wayfair, an online furniture retailer, because the shop omitted state sales tax from its orders.

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