The 5-4 decision overturns the 1992 Supreme Court ruling that barred states from collecting sales tax in states where they have no physical storefront. Indiana Chamber of Commerce vice president of taxation and public finance, Bill Walz, says the change levels the playing field and will boost Indiana's sales tax base. Chief Justice John Roberts dissented, saying the decision should be left to Congress, and was joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.
Sales tax collection previously followed that is commonly known as the physical presence rule. That position was to target huge retailers, without hitting smaller shops who sell their wares through eBay and Amazon. After the Supreme Court's decision was announced, shares in Wayfair and Overstock both fell.
Big chains have been collecting sales tax nationwide because they typically have physical stores in whatever state a purchase is being shipped to.
Even if you're a small online seller with a presence in a single state, should you immediately start collecting sales tax from your out-of-state buyers? But, like most things related to taxes, things were a bit confusing. Customers were generally supposed to pay the tax to the state themselves if they didn't get charged it, but the vast majority didn't.
In testimony before the Legislature's House Ways and Means Committee in 2017, analysts gave a rough estimate of $200 million in potential annual new sales tax revenue from applying the sales tax to more remote sales. USA Today points out that most of the top 20 e-commerce sellers already collect sales taxes in most states because they have warehouses or local showrooms there or because state laws can successfully reach them. The decision reverses a 1992 Supreme Court ruling in Quill vs. "As much as I like the internet, real harm has been done", says Mike Brey, owner of two Hobby Works stores in Maryland.
The court decision could also be important in Florida because of the state's heavy reliance on sales-tax revenue.
Where it goes from here: The decision will provide states with more tax revenues, but the overall impact will be small. In other words, the plaintiffs have one more opportunity to make any other Commerce Clause challenges to the law (aside from physical presence) and until we know what they opt to do, enforcement must wait. "There is a chance here that it raises prices for consumers by passing on this tax increase". North Dakota reaffirmed that out-of-state vendors did not have to collect sales taxes.