US Supreme Court allows states to levy sales tax on online purchases

The court decisions that prevented states from levying taxes said that if a company delivers a product ordered via the Internet to a state in which the seller does not have a “physical presence” (warehouse, store or office), then the buyer’s tax is not taken. It was assumed that buyers should voluntarily pay state tax if the seller did not tax them, but the overwhelming majority of buyers did not.

According to Chief Justice Anthony Kennedy, previous court decisions were “erroneous.” He added that every year this trick caused more and more economic damage to the states.

Also, according to the AP, the court’s decision is beneficial for large retail chains, which insisted that the rule of the “physical presence” of the seller is unfair to them. Many retailers, including Apple, Macy's, Target and Walmart were forced to levy a tax on all online sales, as their offices, stores and warehouses are located in almost all US states.

Taking tax from customers is compulsory for the company AmazonHowever, this rule does not always apply to third-party vendors who use the site. Amazon as a trading platform.

Benefit from the old rules received small sites with a small number of offices. This, for example, is about the seller of jewelry Blue nile, pet supplies website Chewy.comseller of clothes Ll bean. Sellers who use sites as sites eBay and EtsyThey are also not obliged to charge sales tax on their customers.

The Supreme Court decision applies to law passed in South Dakota in the 2016 year. The state governor said that the territory entrusted to him annually loses about $ 50 million per year due to the fact that state residents do not pay sales tax on goods purchased on the Internet from sellers from other states. At the same time, in South Dakota there is no tax on corporate profits.

State legislators passed an act that challenges the decision of the Supreme Court of the year 1992. This act requires sellers from other states who receive more than $ 100 thousand per year annually, doing business in South Dakota, to collect sales tax from buyers and pass it on to state authorities. The same requirement applies to merchants who annually conduct more 200 transactions with state residents.

State authorities have decided to oblige some online sellers to levy tax on customers and sued popular sites. Overstock, Newegg and Wayfair. The Supreme Court ultimately decided in favor of South Dakota. The state authorities were able to convince the judges that the rules of the “physical presence” of the seller are unfair.

The Trump administration supported the South Dakota authorities, the AP notes.