States can now force online retailers to collect sales tax

Kelley Robertson
June 21, 2018

In response to the ruling, the stocks of several internet retailers, including Amazon, eBay and Wayfair, all dropped.

Anyway, that's that. Within a year or less, every state will collect sales tax on internet and mail-order sales. The decision overturns a 1992 ruling that prevented the practice.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel of the Retail Industry Leaders' Association. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there.

During an interview with FOX Business in April, National Economic Council Director Larry Kudlow said changing the law could level the playing field between traditional and e-commerce retailers.

The idea of online taxes for a long time was limited to companies who had a physical presence in that state.


Three identical bills were filed during the special session to match Louisiana's law with South Dakota's in case the U.S. Supreme Court allows...

Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

In the digital era, the costs of complying with different tax regimes "are largely unrelated to whether a company happens to have a physical presence in a state", Kennedy wrote.

From here on out, states can now force shoppers to pay the sales tax upfront no matter where you're buying from. South Dakota's governor has said his state loses out on an estimated $50m a year in sales tax that doesn't get collected by out-of-state sellers. 106, §5. Third, South Dakota is one of more than 20 States that have adopted the Streamlined Sales and Use Tax Agreement.

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