Supreme Court Issues Highly Anticipated Decision Regarding Sales Tax

The US Supreme Court  by a 5-4 vote on June 21 opened the door for states to collect more sales taxes from Internet retailers upholding a law passed in South Dakota in 2016.  The ruling will allow states to collect sales tax on purchases their residents make from remote retailers, sweeping aside restrictions that date to the mail-order catalog era that limited tax collections only to vendors that had stores or some other physical presence in the state.  The ruling upheld the State’s requirement that certain retailers, with no physical presence in South Dakota, collect sales taxes from customers and held that South Dakota’s law was not a burden on interstate commerce.

Experts expect smaller businesses that sell over the Internet will face a much harder time collecting and remitting the correct tax amount for thousands of state and local tax jurisdictions across the country. A number of local businesses rely heavily on online sales, either through their own websites or through digital marketplaces run by companies such as eBay, Amazon, and Etsy.

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