Supreme Court says states can require online retailers to collect sales tax

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Over on NBC News, they are reporting that the US Supreme Court has ruled 5-4 that states can now force retailers to collect sales tax on online sales regardless of where the business is located. South Dakota law, the focus of the court ruling, requires online retailers with more than $100,000 in annual sales to collect taxes.

Shares of large internet sellers tumbled in midday trading on June 21 after the US Supreme Court said those merchants could be required to collect sales tax in US states where they don't have a physical presence.

The court chose to overturn a 1992 decision that a physical presence was necessary to require retailers to collect and send sales taxes to a state.

For the full story, head on over to CNN Money.

"It is about Main Street fairness", Davids said after the high court released its ruling Thursday.

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"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. "Today, the Supreme Court applied bacon grease to the slippery slope of states taxing and regulating outside their borders", Andrew Moylan, Executive Vice President of the National Taxpayers Union Foundation and head of the organization's Interstate Commerce Initiative, said of the ruling.

Now that Amazon's distribution network spans the country, it collects sales tax nationwide, though it doesn't collect on behalf of third-party sellers. Estimates of how much money the states are losing vary dramatically, ranging from more than $200 billion over five years to a recent estimate from the Government Accountability Office of between $8 billion and $13 billion per year.

Now it's up to Congress to figure out a system for interstate commerce that's simple enough for small businesses to manage while still allowing states to determine how taxes will be collected.

"Correctly calculating and remitting sales taxes on all e-commerce sales will likely prove baffling for many retailers".

Meanwhile, the shift toward online shopping has resulted in Washington collecting fewer tax dollars, according to state Sen.

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Or, it could raise little new money for the state.

"In Florida, it is the buyer's responsibility to pay tax directly to the state; there's actually a (form for a) separate 6 percent tax for out-of-state purchases".

Amazon has already been charging sales tax in 45 states. Amazon was down almost two percent, although Amazon may be one of the least-affected retailers.

South Dakota Gov. Dennis Daugaard called Thursday's decision a "Great Day for South Dakota", though the high court stopped short of greenlighting the state's law. The decisions made it more hard for states to collect sales tax on certain online purchases, and more than 40 states had asked the high court for action.

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