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Supreme Court clears way to force online shoppers to pay sales tax

FILE - This April 23, 2018, file photo shows the Supreme Court in Washington. The Supreme Court says states can force online shoppers to pay sales tax. The 5-4 ruling Thursday is a win for states, who said they were losing out on billions of dollars annually under two decades-old Supreme Court decisions that impacted online sales tax collection. The high court ruled Thursday to overturn those decisions. (AP Photo/Jessica Gresko, File)

WASHINGTON, D.C. — In a decision that will impact online shopping for all Americans, the U.S. Supreme Court on Thursday upheld a South Dakota law which required online companies to collect and remit state sales taxes, even if that company did not have a ‘physical presence’ in the state.

"Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States," wrote Justice Anthony Kennedy, in a 5-4 decision in South Dakota v Wayfair, Inc.

“These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” the majority wrote.

The 1992 Quill physical presence precedent is "unsound and incorrect," says SCOTUS, overturning it. Here's the opinion in #SDvWayfair:https://t.co/MWc8cy5rEm

— Corinne Ruff (@corinnesusan) June 21, 2018

The ruling overturned previous Supreme Court precedents from the 1992 Quill case, which had theoretically made internet sales a tax-free zone in certain situations; over the years, that changed, but this ruling will now require online sellers to collect sales taxes for all states.

"I would say this is a good day for states and it’s a good day for those in the retailing space who have for many years been disadvantaged because of the two-tiered system that’s been in place," said Governor Charlie Baker.

Boston-based Wayfair issued a statement saying, "Wayfair has long supported a legislative solution that would establish a level playing field for brick-and-mortar and online retailers by permitting states to collect sales tax on online sales. While we believe the Court was not the ideal venue for creating this level playing field, we expect that today’s decision will bring clarity and certainty to this issue."

The company added that it already collects and remits sales tax on approximately 80% of its orders in the United States and does not expect the decision to have a noticeable impact on business.

MORE DETAILS: Supreme Court: States can force online sellers to collect sales taxes

Jamie Dupree contributed to this story.

Cox Media Group

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