A New Avenue for State and Local Taxes
Americans love shopping online, in large part because of lower prices. Online merchants offer lower prices because they have a lower overhead compared to traditional brick-and-mortar retailers – and they also enjoy a sales tax advantage.
A 1992 Supreme Court decision prohibited states from requiring businesses to collect sales taxes on online purchases by state residents unless the business had a physical presence in that state (such as retail outlets).
Traditional retailers have cried foul for years, claiming that the growth and ease of online commerce has put them at a significant disadvantage. State governments have also complained about growing tax revenue gaps as online purchases take up a larger percentage of all retail sales.
Last week, the Supreme Court reversed course. In a 5-4 ruling, the Court upheld a South Dakota law requiring any merchant, online or otherwise, to collect and remit a 4….