U.S. court backs states over web sales tax

Supreme Court rules that states may require online retailers to collect sales taxes

Last year, states could have collected as much as $13.4 billion in additional online sales taxes, according to the General Accountability Office. So it passed a law requiring all but the smallest retailers, including Internet companies, to collect taxes on the sales they make in the state, even if they had no physical presence there. This ruling could help clear away any legal objections to taxes like Chicago's Netflix tax.

Do you agree or disagree with how the Supreme Court ruled in this case? The decision overturns a 1992 ruling that prevented the practice.

Justice Anthony Kennedy wrote that the physical presence rule "each year. becomes further removed from economic reality and results in significant revenue losses to the states". Until now, online retailers with no physical presence in a state were not. That's because they typically have a physical store in whatever state the purchase is being shipped to. "It is unfair and unjust to those competitors, both local and out of state, who must remit the tax; to the consumers who pay the tax; and to the states that seek fair enforcement of the sales tax".

Wayfair (W), Etsy (ETSY) and eBay (EBAY) all dipped in early trading Thursday immediately following the ruling.

South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair.

Most states would need to pass legislation before seeking to collect the additional taxes, although some have already enacted laws or regulations similar to South Dakota's.

Three identical bills were filed during the special session to match Louisiana's law with South Dakota's in case the U.S. Supreme Court allows...

That said, South Dakota's tax system includes several features that appear created to prevent discrimination against or undue burdens upon interstate commerce.

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