Supreme Court Decides Wayfair Online Sales Tax Case

The Supreme Court rules against Wayfair and other online retailers and overturns ban on the collection of online sales taxes. Jenny Kane  AP

The Supreme Court rules against Wayfair and other online retailers and overturns ban on the collection of online sales taxes. Jenny Kane AP

This went against a 1967 Supreme Court ruling, but to be fair, that ruling was based on mail-order retailers, and the basis of the court's ruling was essentially "Look, it's not like people are buying everything through the mail!"

The high court has said for more than 50 years in various rulings that states can not collect taxes from sellers without a "physical presence" in those states.

With this ruling look for more states and local governments to push for taxes on online physical and digital sales. The cases the court overturned said that if a business was shipping a customer's purchase to a state where the business didn't have a physical presence such as a warehouse or office, the business didn't have to collect the state's sales tax. They added that the lack of sales tax was leading to "significant revenue losses", especially in states where a lack of income tax didn't give them many alternatives. The court justices include: (seated, from left): Associate Justices Ruth Bader Ginsburg and Anthony M. Kennedy, Chief Justice of the U.S. John G. Roberts, Associate Justices Clarence Thomas and Stephen Breyer. That's because they typically have a physical store in whatever state the purchase is being shipped to.

Amazon has been collecting sales taxes in all states that have the tax since April 2017 and in many states - including Texas - much earlier.

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


Attention shoppers: If you've been avoiding sales taxes online by shopping with retailers who don't have a physical presence in your state, that will be changing soon. Retailer eBay warned that taxing Internet sales would place "crushing burdens on small online businesses, causing many to curtail operations and damaging the national economy".

The case the court ruled in has to do with a law passed by South Dakota in 2016. Lawmakers in the state, which has no income tax, passed a law created to directly challenge the Supreme Court's 1992 decision. But half of Amazon's sales are from third-party Marketplace sellers, who for the most part don't collect sales taxes.

Chicago was one of the first areas to impose a so-called Netflix tax but other states and towns have started to tax streaming and video services.

South Dakota has estimated that it could take in up to $50 million a year in additional revenue with these taxes being collected.

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