The Supreme Court gives States the green light to levy a Tax on Internet sales

The Supreme court issued today a decree authorizing States to require sales tax for online sales shipped to their state, even for companies that have no physical presence in the state. Justice Kennedy was joined by judge Clarence Thomas, Ruth Bader Ginsburg, A. Jr., Samuel Alito and Neil M. Gorsuch, in a 5-4 majority opinion.

A PDF link to the decision

The case was officially brought to South Dakota against online house of good and wayfair company. Also noted in the decision, are newegg and Overstock. Shares of online retailers fell after the decision was made.

Many Internet companies aggressively against the measure. Amazon, though, already charging and paying sales tax in all States on items sold by the retailer, but not for third-party sellers suppliers.

Subject to the decision, it is safe to assume that all States will soon begin requiring taxes on most Internet sales shipped to your state. There are concerns mentioned by justice Roberts in a dissenting opinion that it will be hard on small businesses, and it is possible that States will require only large enterprises in the transfer tax. From the dissent:

More than 10,000 jurisdictions to levy sales taxes, each with “different tax rates, different rules governing tax exempt goods and services, various categories of goods definition, and a different standard to determine whether out of state seller has a substantial presence” in the country. Sales Tax Report 3. A few examples: new Jersey knitters to pay tax on yarn purchased for art projects, but not on a yarn intended for a sweater…Texas sales tax simple deodorant at 6.25%, but does not impose a tax on deodorant with antiperspirant. Il klassificeret Twix and Snickers candy bars—chocolate and caramel confections usually displayed side-by-side in the candy aisle—like food and candy, respectively (flour Twix; Snickers-no), and taxes them differently.

Regardless, this means that some of our online purchases become more expensive. Without going into the legal nitty-gritty, it seems in General true that in our epoch there should be no difference between physical stores and online stores. Even the Dissenters noted that it needs to be worked on by Congress, unlike the court, but not the idea itself. I also liked how this resolution was non-partisan – everything seems to be going the party line these days.