Supreme Court Ruling Means Sales Tax Changes For Montana's Online Businesses

States stand to pocket billions as Supreme Court rules internet businesses must collect sales taxes

Officials say that a U.S. Supreme Court ruling that retailers must collect sales tax from buyers in other states could mean more than $200 million a year to IL.

Thursday's ruling comes after President Donald Trump's criticism of Amazon.com Inc (AMZN.O) on issues including taxes. He wrote that the test was "a judicially created tax shelter for businesses that limit their physical presence in a state but sell their goods and services to the state's consumers".

But the cost increase for them will come in the form of a heavy compliance burden trying to navigate the more than 10,000 tax jurisdictions in the U.S.as 45 of the 50 states impose sales taxes on purchases that range between 4.5 percent to 10 percent. He says the court ruling made reaching the threshold harder. Justice Clarence Thomas, who originally supported the rule at issue, said he now thinks the it "can no longer be rationally certified" and supports the decision to overturn it. Wayfair, the online furniture company named in the case, said in a statement the decision would not have a noticeable impact on their sales because they already collect sales tax on most transactions, but that it could impact retailers that don't already have that in place.

The Supreme Court in 2015 unanimously upheld Colorado's law requiring those notices and reports.

In its challenge, South Dakota noted that "times have changed", with online sales growing at four times the rate of total retail sales. But he said there were insufficient reasons to overrule the precedents and that Congress should have been left to address the matter.

"Any adjustment to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress", the chief justice wrote. Justice Roberts penned the dissenting opinion and was joined by three other justices: Breyer, Sotomayor and Kagan. North Dakota, that said companies can not be forced to collect sales tax from customers in a state where they don't have a physical presence like a store or distribution center.

"(Twix have flour; Snickers don't), and taxes them differently". "People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country - but probably not if they have to figure out the tax due on every sale".

The court overruled that ruling, Quill Corporation v.

"Each year, the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", Kennedy wrote.

In 2012, analysts at the University of Missouri Truman School of Public Affairs estimated that Missouri lost an average of $358 million annually in state and local sales and use tax revenue. More than 20 states define a seller's physical presence as including any affiliated website.

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.

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