WASHINGTON – The U.S. Supreme Court ruled Thursday states can force online shoppers to pay sales tax.
The 5-4 ruling is a win for states, who said they were losing out on billions of dollars annually under a two decades-old Supreme Court decision that impacted online sales tax collection.
Previously companies were not required to collect sales tax on every online purchase.
The cases the court overturned there previous decision that said that if a business was shipping a product to a state where it didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax.
Customers were generally supposed to pay the tax to the state themselves if they don’t get charged it, but the vast majority didn’t.
In addition to being a win for states, the ruling is also a win for large retailers, who argued the physical presence rule was unfair.
Retailers including Apple, Macy’s, Target and Walmart, which have brick-and-mortar stores nationwide, generally collect sales tax from their customers who buy online.
That’s because they typically have a physical store in whatever state the purchase is being shipped to.
Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third party sellers who use the site to sell goods don’t have to.