WASHINGTON -The National Retail Federation issued the following statement from President and CEO Matthew Shay in response to a U.S. Supreme Court ruling in South Dakota v. Wayfair allowing states to require online sellers to collect sales tax the same as local stores.
The order from the Supreme Court strikes down previous rules that said states could not collect sales tax from a business if that business did not have a physical presence in the state.
"This will go a long way to ensure local businesses are on a level playing field with online retailers", he said.
Louisiana has laws aimed at being able to take in taxes from online shoppers and already collects some sales taxes from retailers like Amazon. "This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both". But there was one thing they couldn't overcome: the sales tax difference. A more recent analysis conducted by the United States Government Accountability Office found Missouri may miss out on between $180 - $275 million annually in state and local sales tax.
In addition to the impact on individual brick-and-mortar retailers, the online sales tax policy also has implications for the broader economy. The Trump administration backed South Dakota in the case, urging that the 1992 ruling be overturned or at least limited to catalog sales. Amazon collects sales tax for products that it sells directly, but third-party vendors that sell goods on the site may not collect sales tax.
Some say the ruling may cause them to hunt a little harder for the best deal, while for others, clicking checkout still saves from some unnecessary trips. Other states would have to revise their tax laws. The department said it would provide guidance to retailers within 30 days.More news: Game of Thrones Star Kit Harington Marries Rose Leslie
Writing the majority opinion, Gorsuch and Kennedy agreed that this particular exemption created a "judicially created tax shelter". But he said there were insufficient reasons to overrule the precedents and that Congress should have been left to address the matter.
Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan joined the dissent. In turn, that means it's a huge loss for e-commerce companies like Wayfair, Newegg and Overstock (all involved in the case), which have argued that the complexity and cost of collecting and remitting would put many small digital sellers out of business.
"One vitalizing effect of the Internet has been connecting small, even "micro" businesses to potential buyers across the nation", he wrote.
The point is further reinforced by analysts like the ones from Baird Equity Research who said they expected a "limited impact on Amazon" from the ruling which means less upside for its rivals. North Dakota had been "wrongly decided".
Information for this article was contributed by Greg Stohr, Alexa Green, Molly Schuetz and Spencer Soper of Bloomberg News and by Adam Liptak of The New York Times.