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SCOTUS: States Can Make Internet Vendors Collect Sales Tax

Before the ruling, states said they were missing out on billions of dollars in sales tax revenue.

States can require Internet vendors to collect sales tax even if they don’t have a physical presence in the state, the Supreme Court ruled Thursday. Before the ruling, states said they were losing billions of dollars in sales tax revenue and businesses with brick-and-mortar stores complained they were at a disadvantage. The 5-4 ruling overturned a 1992 decision, Quill Corporation v. North Dakota, which stated that businesses did not have to collect taxes “unless they have a substantial connection to the state,” The New York Times reported. Online retail stocks fell after the ruling, with Amazon dropping 1 percent, and Etsy, a craft store, dropping 4.5 percent. “Quill puts both local businesses and many interstate businesses with physical presence at a competitive disadvantage relative to remote sellers,” Justice Anthony Kennedy wrote in the majority decision. Chief Justice John Roberts dissented, writing that rule changes “with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress.”