IN officials react to Supreme Court's online sales tax decision

States stand to pocket billions as Supreme Court rules internet businesses must collect sales taxes

The U.S. Supreme Court in Washington

The biggest e-tailer in America, Amazon, now collects sales tax in the 45 states that charge sales tax, though it does not collect taxes on items sold by third-party sellers. Lawmakers in the state, which has no income tax, passed a law created to directly challenge the Supreme Court's 1992 decision in Quill Corp vs. The decision is seen as a blow to New Hampshire businesses, which contend that collecting a sales tax on behalf of other states is burdensome.

Sales tax is pretty interesting in the United States as it's done on a state-by-state basis.

"In light of internet retailers' pervasive and continuous virtual presence in the states where their websites are accessible, the states have ample authority to require those retailers to collect state sales taxes owed by their customers", U.S. Solicitor General Noel Francisco said in a friend-of-the-court brief. David Bouffard, a spokesperson for Signet, owner of James Allen, said, "Signet has been a proponent of the Marketplace Fairness Act for years, collecting sales tax at both our store and branded e-commerce businesses accordingly".

Justice Anthony M. Kennedy, who wrote Thursday's majority decision, and five of the nine SCOTUS judges all agreed that Quill was obsolete and that it unfairly disadvantaged brick-and-mortar stores.

Supreme Court Justice Kennedy delivered the opinion of the Court, in which Thomas, Ginsburg, Alito, and Gorsuch joined.

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

The U.S. Supreme Court's ruling that declares states can collect sales tax for online purchases could potentially boost Washington state's bottom line by hundreds of millions of dollars. Now, rivals will be charging sales tax where they hadn't before.

"States like South Dakota will now be allowed to require sellers that are selling substantial amounts of product into the state to collect and remit sales tax", he said. Amazon collects state sales tax on items it sells directly, but third party vendors on Amazon are now not required to collect the tax.

The decision overturned a 1992 ruling that concerned mail-order businesses, back when those sales totaled $180 million. Shares of Etsy Inc and eBay Inc, which provide platforms for small retailers to sell their wares, were off 2.7 percent and 1.8 percent, respectively.

Under the ruling Thursday, states can pass laws requiring out-of-state sellers to collect the state's sales tax from customers and send it to the state. Smaller, local businesses also complained that the previous decisions put them at a disadvantage with online competitors. "We have long fought the battle to defend Main Street businesses and now with today's ruling, all businesses will compete on a level playing field", said South Dakota Republican Governor Dennis Daugaard. The losers, said retail analyst Neil Saunders, are online-only retailers, especially smaller ones. That software, too, can be an added cost.

Kennedy also wrote that the concerns of small retailers, who do minimal online sales, could be dealt with by Congress or by a further court case.

"E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule", the dissenting opinion read.

Chief Justice Roberts argued in his dissent Congress should be the one to address the regulation of commerce between states.

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