The nation's top court ruled on Thursday that states can collect sales taxes for purchases from businesses not within their borders.
"Remote sellers will be required to collect and remit sales tax to North Dakota only if they make a minimum of either 200 sales or $100,000 in sales per year in North Dakota, even if they don't have a physical presence here".
The 5-4 court opinion finally recognizes the impact of the internet and acknowledges commerce has changed since the court ruled in the 1960s and early 1990s that businesses had to have a physical presence in the state before the state could require them to collect state and local sales taxes. Those retailers understandably have had concerns over the years when they faced increasingly intense competition from online sellers who, in some cases, boasted that purchases from their sites were not subject to the same taxes that would need to be added to the price of the same goods from a local store. In Wayfair v. South Dakota, the Court concluded that the "sales tax nexus" previously articulated by the Court in Quill v.
"One report says West Virginia stands to have the second-biggest gain on a percentage basis in the country by collecting on online sales", he said.
The decision was a victory for South Dakota, which, like some other states, has no income tax and relies on sales taxes to fund most of the state's services. Reaction to the ruling is mixed Companies with a physical retail presence in states have cheered the decision since before they were at a competitive disadvantage with online sellers.
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"Naturally, in a more rural area like Northeast Tennessee and specifically Washington County, we get a smaller share than the more dense, heavily populated areas", Grandy said.
The conservative chief justice, John Roberts, dissented along with liberal Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan. The NRF had argued in a friend-of-the-court brief past year that there's a wide variety of software available to automatically collect the sales tax owed. She says the new online sales tax won't stop her. It sent the law back to South Dakota's highest court to be revisited.
The winners are local brick and mortar businesses, which will be able to compete pricewise with online retail giants. Congress could also step in and block retroactivity, Jones said. Many small online sellers may use Amazon's platform as it will collect and remit sales tax for them.
Those governments are now expected to swiftly start forcing online vendors to collect taxes. The ruling potentially means thousands of small businesses that never collected sales tax except in their home states will be responsible for tax in some 10,000 state and local jurisdictions nationwide.
Another question for states to consider will be whether to push to collect tax on previous transactions. Perhaps most importantly, the state law does not permit sales tax collection for past purchases, meaning that businesses don't have to worry about a huge tax bill that they never anticipated. South Dakota has estimated it loses about $50 million annually to e-commerce. "With our state's growing economy, I don't want to reach into West Virginians' pockets when we don't need to", he said. "And it's about time".