Supreme Court rules that internet sales can be taxed by states

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The court on Thursday decided in favor of states in South Dakota vs. Wayfair, a direct challenge to a 1992 decision in Quill Corp. vs.

The decision overturns a 1992 ruling that prevented the practice.

The case is South Dakota v. Wayfair. They had resulted in some companies not collecting sales tax on every online purchase. Despite federal efforts to enforce this, and individual states making it happen, the rule was clear: If a company didn't have a "physical presence" in your state, it didn't have to collect state sales tax from you.

State and local governments had grown increasingly agitated as sales from brick and mortar retailers gave way to online retail, which now comprises approximately 9.5% of the dollar value of total purchases.

Only five states do not collect a statewide sales tax.

The decision ends years of work by the retail industry "to reverse a pre-internet era rule that distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel for the Retail Industry Leaders Association.

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"Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor.

South Dakota is leading the legal charge, passing a law requiring the collection of sales tax on Internet vendors with at least 200 yearly transactions or $100,000 in sales to its residents. Although technically consumers are required to pay sales tax on all purchases, it is practically impossible to collect without the retailer applying it at the point of sale. Amazon already taxes items from its own warehouses.

South Dakota was backed by President Donald Trump's administration in the case. Forty-five of the 50 states impose sales taxes.

Amazon's stock is down almost a percent since the announcement, Etsy is down 3.12 percent.

South Dakota specifically brought this lawsuit against Wayfair, Overstock.com, and Newegg.

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