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Shares of online retailers fell on Thursday after the Supreme Court ruled 5-4 that states have the authority to require online retailers to collect sales tax on all purchases within their borders, whether the seller has a physical presence in the state or not.

Today's ruling upheld a statute from South Dakota, which requires any company with more than $100,000 in annual sales to collect sales tax on sales made to customers in the state.

Brick-and-mortar retailers had argued that they were at a disadvantage under the previous law because they have to charge sales tax at the time of purchase, while online retailers did not in states where they had no physical presence or warehouse.

For the full story, head on over to CNN Money. States could enact minimum sales thresholds for triggering the online tax collection.

For one, there is no certainty that other states will follow South Dakota's example and only apply the tax to large businesses, or that they will not include retroactive taxes: lawmakers will be very tempted to try to reap a financial windfall from the change in the law. That climbs to about $103 million in the next fiscal year.

Quill imposes the sort of arbitrary, formalistic distinction that the Court's modern Commerce Clause precedents disavow in favor of "a sensitive, case-by-case analysis of purposes and effects". North Dakota, that involved mail-order catalogs. More than 20 states define a seller's physical presence as including any affiliated website.

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. These states also have access to software for sellers under the agreement which automatically collects and remits sales taxes for every sale in a state.

"Over 10,000 jurisdictions levy sales taxes", it noted, "each with "different tax rates, different rules governing tax-exempt goods and services, different product category definitions, and different standards for determining whether an out-of-state seller has a substantial presence" in the jurisdiction".

"I feel bad for the New Hampshire-based retailers because they don't have the infrastructure in place to collect sales taxes", said Nancy Kyle, president and CEO of the New Hampshire Retail Association, a 900-member organization that didn't take a position on the tax.

It's a big change for the retail industry and for state budgets.

In anticipation of the ruling, IL lawmakers included language in budget bills passed last month to allow the state to begin collecting sales tax from a broader swath of online purchases.

Chief Justice John Roberts Jr., who wrote the dissenting opinion, argued that the Supreme Court left this question to Congress in 1992, and Congress has not acted.

But sellers that only have a physical presence in a single state or a few states could avoid charging customers sales tax when they're shipping to addresses outside those states. But paying online sales tax is nothing new, especially if you buy from large stores like Amazon, Walmart, Dell, and so on.

Wayfair said that it "welcome [s] the additional clarity provided by the Court's decision today". Collecting taxes makes it marginally more hard for them, and so, Roberts wants the Court to leave it alone.

Even before the ruling, Pennsylvania and Washington state had passed laws that would require Amazon to collect sales tax on items sold by third-party vendors.

The case is South Dakota v. Wayfair, 17-494.


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