U.S. Supreme Court Says States Can Require Retailers Without Physical Presence to Collect Sales Tax

  It is a question that has come before the United States Supreme Court on two prior occasions: When can a state require an out-of-state seller to collect and remit sales tax? The Court has twice found that the collection obligation turned on whether the seller had a “physical presence” in the state. But, this time, the answer was different. Recognizing that the Court’s prior decisions got it wrong, the Court in South Dakota v. Wayfair, No. 17-494 (U.S. Sup. Ct. June 21, 2018), overruled five decades of precedent to open the door for states to require out-of-state sellers to collect and remit sales tax, even when they do not have a physical presence in the state. The South Dakota Law It began in South Dakota, a remote state alleging that it loses $48 to $58 million annually in revenue because out-of-state sellers without a physical presence in the state fail to collect and remit sales tax. Although consumers are required to pay use tax when sales tax is…

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