In 2016, South Dakota passed a law requiring any retailer that conducts at least 200 transactions or has at least $100,000 in annual sales within its borders to collect sales tax, regardless of whether the business has a location in the state.
The high court ruled in 1967 and again in 1992 that companies without a physical presence in a state did not have to collect sales taxes. The internet retailers argued that allowing every state to collect taxes on online sales would cause confusion and unreasonable burdens in today's online-heavy retail economy.
Additional reporting from Newsy affiliate CNN. As a result, state and local governments in 45 states lose billions of dollars annually in taxes.
Most sales taxes are called "sales and use tax", because consumers generally have a legal obligation to report and pay use tax when sales tax isn't collected on a sale. All Florida taxpayers will benefit from today's ruling, which will bring equity and fairness to Florida's sales and use tax. "Whether you're an online retailer or a brick-and-mortar retailer, you should have the same legal standards apply for you with respect to taxation, and that's really what this decision is about".
"If you look at the implosion of big-box stores, if you look at the explosion of online purchasing, these major life-changing market trends ... have a profound effect on the state's tax policy", he said. Amazon already taxes items from its own warehouses.
While the decision does not significantly change the fortunes of big chains or e-commerce retailers, the impact from the decision is likely to be felt by smaller online businesses. The pre-internet era physical presence rule put "local businesses ... at a competitive disadvantage relative to remote sellers", and it "produced an incentive to avoid physical presence in multiple states", Kennedy wrote in his opinion. Online sales are growing at four times the rate of total retail sales - 16 percent vs. 4.4 percent. He believes the new ruling will "level the playing field" for brick and mortar stores in West Virginia.
The decision came on a South Dakota suit against Wayfair.com, with the state claiming that the company should collect sales taxes on sales in the state. "We're going to encourage more people to shop locally and keep the money in Columbia".
"Vets all over the country have lost a lot of income for a long time", says Dr. John de Jong, owner of Newton Animal Hospital in MA and president-elect of the American Veterinary Medical Association.