Favourable U.S. tax ruling gives limited boost to big-box retailers


Gov. Pete Ricketts was among those opponents, although he had been seeking a compromise at the time the bill failed. Marty Jackley, the state's attorney general, defended the law by claiming that South Dakota was "losing millions for education, healthcare and infrastructure" and that the unfair playing field was hurting its citizens.

Rob Karr, president and CEO of the Illinois Retail Merchants Association, praised the decision, saying it "levels the playing field for bricks-and-mortar stores".

"There are nuances to every opinion", he said. Consumers flock to online sales channels for a number of reasons, but the convenience of online shopping remains the primary driver that is sending customers away from traditional retailers.

In a case involving MA online retailer Wayfair, the US Supreme Court Thursday opened the door for states to collect sales taxes on products their residents buy from Internet retailers in other states. The internet has changed retailing, and Justice Anthony Kennedy, who wrote the new decision, said, "each year, the physical presence rule becomes further removed from economic reality". "These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause". But state's were missing out on big bucks if there was no physical store. Small businesses may have to figure out how to comply with various state sales tax laws, though there are software options to help.

"This now gives Amazon [, which already collects sales tax, ] insurance against there not being a Jet.com-like start-up using the sales tax advantage against them", he said. However, nothing will actually change until states (or the federal government) enact new regulations to force the collection of sales tax. In subsequent years, the state could bring in between $5 million and $15 million from online sales tax revenue.

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The department indicated that people now collecting sales taxes should continue, but it is unclear when online sellers will need to begin collecting the taxes. "The U.S. Supreme Court has ruled that online-only sellers should have to play by the same rules that local retailers do".

Prior to Wayfair v South Dakota, businesses that didn't have a physical location in a state were not required to remit sales taxes to that state government for their sales. The state appealed the decision, and the Court reversed its 1992 decision on Thursday. Many argued Congress should set up standardized rules to simplify tax collection requirements.

Shares of Amazon, Wayfair, Etsy and eBay were all down in early trading Thursday immediately following the ruling. This will be a huge boost to state budgets, but online retailers won't be pleased.

The Trump administration had urged the justices to side with South Dakota.