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The message of that decision for e-commerce players? They've grown so big that they can't get any special breaks anymore, at least when it comes to collecting sales tax, regardless of whether they have any physical presence in a state.
The highest U.S. court made the decision after South Dakota in 2016 filed a lawsuit against major pure-play online retailers Wayfair, Overstock.com and Newegg regarding state tax collection. Thursday's ruling in effect overturned a prior court decision in 1992 that has since given a sales tax advantage to online retailers.
In the majority opinion written by Justice Anthony Kennedy, the Supreme Court said times have changed to such a degree that online retailers no longer qualify for “an arbitrary advantage over their competitors who collect state sales taxes” by claiming they don’t have a physical presence in a state.
“The internet’s prevalence and power have changed the dynamics of the national economy,” Justice Kennedy wrote. He added internet players not collecting sales tax have cost states as much as $33bn in sales tax revenue each year.
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