Chamber, Governor Applaud Supremes' Online Sales Tax Ruling

High Court Online shoppers can be forced to pay sales tax

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The case originated from a lawsuit that the state of South Dakota had filed against four online retailers, including the online furniture retailer Wayfair. The South Dakota law only applied the tax to online retailers that had at least $100,000 of annual sales in the state or 200 individual transactions.

On June 21, the US Supreme Court overturned a 26-year ban on levying online sales tax, satisfying South Dakota's complaint of an outdated ruling that had made much of the internet a tax-free zone. The court ruled that states can now require online retailers to collect sales tax from their customers.

Amazon has actually been long collecting state and local sales tax-but only for items it sells directly, which is about half of its business.

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Kennedy was joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito, and Neil Gorsuch to make the decision.

The ruling is a victory for states that said they were losing billions of dollars in revenue every year, and for large retailers that had argued that the physical presence rule meant they were playing by different rules than online-only sellers.

The Supreme Court's ruling "will help stem state tax erosion in a changing economic environment", the rating agency said, noting that e-commerce grew 15.9% a year ago, while brick-and-mortar retail sales increased only 3.4%. This latest Supreme Court ruling said that earlier decision was obsolete in an era of explosive e-commerce.

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Sales tax collection previously followed that is commonly known as the physical presence rule. Online shopping for many web commerce sites didn't collect local sales taxes.

Illinois Department of Revenue Director Connie Beard says in a statement, "To be clear, this is not a new tax". Five states don't charge sales tax. Legislators began considering going after Amazon when the company agreed to start paying the tax in other states, but not here.

But S&P also said it does not "anticipate any immediate rating changes because of the court's decision". For instance, the tax now could be collected from S.C. shoppers who shop online at outdoor retailer L.L. Bean.

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