WASHINGTON (AP) – 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. They had resulted in some companies not collecting sales tax on every online purchase. The cases the court overturned said that if a business was shipping a product to a state where it didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax. Customers were generally supposed to pay the tax to the state themselves if they don’t get charged it, but the vast majority didn’t.
Justice Anthony Kennedy wrote that the previous decisions were flawed.
Officials react to Supreme Court decision
“We applaud the U.S. Supreme Court’s decision in South Dakota v. Wayfair. This decision will help ensure fairness for Tennessee businesses and will specifically help local businesses compete on an even tax playing field with out-of-state online companies. We are currently reviewing the Court’s decision and are considering next steps and what this means for Tennessee.”- Gov. Bill Haslam “The Court’s decision is good news for Main Street business and for states. It correctly leaves to states decisions about who should pay state sales and use taxes and how they should be collected. It stops the federal government from forcing states to prefer out-of-state businesses over Main Street. There still may be a need for Congress to act to adopt the simplified collection of sales tax procedures in the Marketplace Fairness Act that 69 United States senators voted for in 2013.”- U.S. Senator Lamar Alexander”I think most Tennesseans would agree that we are fortunate not to have a state income tax, and to help ensure that remains the case, it is important our sales tax system works. Today’s ruling is a win for states’ rights and gives states like ours the ability to enforce existing state tax laws. It also levels the playing field between local brick-and-mortar businesses that pay property taxes and hire our local citizenry and out-of-state online retailers paying no sales tax.”- U.S. Sen. Bob Corker