Supreme Court decision paves way for state sales tax on internet purchases

Staff Writer

According to National Public Radio (NPR) the U.S. Supreme Court ruled Thursday (6/21/18) that states can collect state sales taxes from online retailers on consumer purchases. The decision overruled a decades-old precedent that had protected out-of-state sellers from being required to collect such taxes.

The following is from NPR:

States stand to gain billions of dollars with the ruling, which marks a new era with an Internet economy that has boomed over the past decade and become a dominant force.

The decision will also have dramatic consequences for small online retailers that do business in many states.

"The Internet's prevalence and power have changed the dynamics of the national economy," Justice Anthony Kennedy wrote for the majority.

The 5-4 decision defied the usual conservative-liberal lineup with Kennedy joined by liberal Justice Ruth Bader Ginsburg, and conservatives Samuel Alito, Neil Gorsuch and Clarence Thomas. The conservative chief justice, John Roberts dissented along with liberals Stephen Breyer, Sonia Sotomayor and Elena Kagan.

Forty-five states rely on sales taxes for revenue, and for those states that have no income tax, sales taxes are very important. 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.