States Can Require Internet Tax Collection, Supreme Court Rules

The U.S. Supreme Court freed states and local governments to start collecting billions of dollars in sales taxes from internet retailers that don’t currently charge tax to their customers.Siding with states and traditional retailers on a 5-4 vote, the court overturned a 1992 ruling that had made much of the internet a tax-free zone. That decision had shielded retailers from tax-collection duties if they didn’t have a physical presence in a state.Writing for the court, Justice Anthony Kennedy said the 1992 ruling, which involved catalog sales, was “unsound” and obsolete in the e-commerce era.

Broader taxing power will let state and local governments collect an extra $8 billion to $23 billion a year, according to various estimates. All but five states impose sales taxes.Wayfair Inc. plunged as much as 9.5 percent on the news, and was down 7.5 percent to $107.45 at 10:20 a.m. in New York


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