In a 5 to 4 ruling, the US Supreme Court has ruled that states can require online retailers to collect sales tax, even if they are not located in that state.
At this point, what happens next is anyone’s guess.
Until now, online businesses have been protected under a law that benefited mail-order catalog companies, stating that they were only responsible for sales tax if they had “substantial” business operations in a jurisdiction. But, as the internet and online shopping have grown, states have complained that they are losing out on billions of tax dollars annually, and that it is unfair to local brick and mortar stores.
The case itself was around a law in South Dakota, which would exempt small businesses (less than $100k in revenue or 200 local sales annually)…but the decision is broad enough that all states will now be allowed to institute laws, and they may or may not have small business exemptions.
Keeping in mind that some states have a standard rate across the board, and others have tax rates that vary by city and county, there are over 12,000 tax districts in the US, so implementations will be complex at best.Follow us at: