How will online sales tax ruling affect consumers?

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President Donald Trump, who has bashed online retail powerhouse Amazon.com Inc and whose administration backed South Dakota, said on Twitter.

The case decided was South Dakota v. Wayfair; South Dakota was suing Wayfair, an e-commerce retailer that does not collect state taxes.

The majority overruled a 1992 decision holding that the Constitution's dormant commerce clause bars states from collecting sales taxes from retailers without a brick-and-mortar presence in the state.

But on Thursday, the Supreme Court ruled in a 5-4 decision that states do have the right to collect sales tax from online retailers that do not have physical presences in their state. The decision reversed a 1992 court decision that held that online retailers could only be required to collect and remit sales taxes if they had stores or some other "nexus" in states. The decisions made it more hard for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action. The state argued it was losing between $48 million and $58 million per year in uncollected sales tax, and the issue ended up in the Supreme Court.

When the internet was in its infancy, online retailers such as Amazon took advantage of tax laws - which hadn't yet caught up with technology - to offer low prices online. The court found the standard doesn't jibe with current-day online retailing. North Dakota, which established the physical presence test for sales and use tax nexus.

In giving a victory to the states, the high court said that rule is outdated. Lawmakers in the state, which has no income tax, passed a law created to directly challenge the physical presence rule.

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"With the appropriate action by the Legislature and Florida Department of Revenue, not only will the state be able to collect the sales and use tax that has always been legally due, but Floridians will no longer be unknowingly breaking the law".

"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. On the other hand, that also means Minnesotans would be paying $150 million more in sales taxes.

If a business had a physical address in a state, it's required to charge sales tax for all orders in that state. Chief Justice John Roberts dissented, saying Congress should be the one to decide on the issue.

Washington, Pennsylvania and Minnesota enacted laws past year requiring Amazon and other online platforms to collect taxes on marketplace sales. Heitkamp suggested that states follow South Dakota's lead and enact laws tailored not to target small businesses. He predicted the Legislature will attempt to clarify its own e-commerce-related tax laws in next year's session and said it was likely some e-retailers here would start voluntarily collecting sales tax in anticipation of those changes.

The case is South Dakota v. Wayfair, 17-494.

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