Supreme Court: States Can Collect Online Sales Tax

The Supreme Court opened the door for states to collect sales taxes on purchases from online retailers even if that company doesn't have a physical presence in that state.

ABC News reports:

In a case that could likely mean consumers paying more nationwide, the Supreme Court Thursday opened the door for states to collect sales taxes on purchases from online retailers even if that company doesn't have a physical presence in that state.

The court overturned a longstanding rule that states can collect sales taxes only on transactions if the retailer has a "bricks and mortar" presence in that state. The decision could allow more states to impose sales taxes on companies that operate entirely online.

The internet retailers argued that allowing every state to collect taxes on online sales would cause confusion and unreasonable burdens in today's online-heavy retail economy.

But the court found it is "unworkable" to apply a rule based on physical offices to online sales, saying it caused more confusion as some states maintained that even allowing users to download an app in their state counted as a "physical presence."

Kennedy also said that the rule makes no sense, and that "this Court should not maintain a rule that ignores these substantial virtual connections to the State."

Business leaders said that the decision helps "brick and mortar" stores.

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