A Supreme Court decision last Thursday has laid the groundwork for states to force online retailers to “collect and remit sales tax” on all orders, regardless of a customer’s location.
As reported by Retail Dive, prior to Thursday’s decision, an online retailer was only legally required to pay — and therefore collect – taxes in the state where they were physically based, which was called a “physical presence standard.” However, “after decades of fights on Capitol Hill and in states across the country, the U.S. Supreme Court in a narrow 5-4 decision… struck down [the] long-standing [precedent].”
“The physical presence rule has long been criticized as giving out-of-state sellers an advantage,” Justice Anthony Kennedy wrote in the court’s majority opinion. “Each year, it becomes further removed from economic reality and results in significant revenue losses to the states.” (An estimated $8.5-$13 billion, annually, in case you’re wondering.)
And while the decision is considered “a win for states as well as brick-and-mortar retailers,” the story also acknowledges that the costs of compliance could hurt smaller e-comm outlets, like just about every store we link to on this site.
You can read more about it at Retail Dive.
