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Supreme Court rules states can force online shoppers to pay sales tax

U.S. Supreme Court steps. File photo

The Supreme Court says states can force online shoppers to pay sales tax.

The 5-4 ruling June 21 is a win for states, who said they were losing out on billions of dollars annually under two decades-old Supreme Court decisions that impacted online sales tax collection.

The high court ruled June 21 to overturn those decisions. They had resulted in some companies not collecting sales tax on every online purchase. The cases the court overturned said that if a business was shipping a product to a state where it didn’t have a physical presence such as a warehouse or office, it didn’t have to collect the state’s sales tax. Customers were generally supposed to pay the tax to the state themselves if they don’t get charged it, but the vast majority didn’t.

Shares in online retailers dropped, and large chains with more stores traded higher following the Supreme Court sales tax ruling.

Under the old rules, some companies did not collect sales tax on online purchases that were made in a state where the business did not have a physical presence, like a warehouse or office.

The state of South Dakota sued online retailer Overstock and home goods company Wayfair in its bid to get the rules changed.

Wayfair lost 1.4 percent to $114.58 and Overstock.com fell 7 percent to $36.15. Etsy slipped 1.6 percent to $43.49 while Amazon lost 1 percent to $1,732.07. Target gained 1.2 percent to $76.32 and Nordstrom added 1.9 percent to $52.83.

An online sales tax bill that takes effect July 1 in Idaho was signed into law earlier this year. The law requires retailers with affiliate sellers in Idaho who do more than $10,000 in business co collect and remit Idaho sales tax.



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