In Wayfair case, Supreme Court to let states collect Internet sales tax

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Thursday's ruling involves a dispute between the state of South Dakota and Boston-based Wayfair Inc., along with other two other online sellers, Overstock.com Inc. and Newegg Inc.

After Justice Anthony M. Kennedy, who wrote Thursday's majority decision, had said the court should reconsider the decision, South Dakota took up the challenge.

Small online businesses will be the hardest hit, said Chris Cox, a lawyer for e-commerce industry group NetChoice.

The ruling puts an end to a legal regime that "distorts free markets and puts local brick and mortar stores at a competitive disadvantage with their online-only counterparts", said Deborah White, general counsel of the Retail Industry Leaders' Association.

"Consumers will quickly feel the negative effects as those businesses dry up or are forced into the arms of Internet giants", he added.

Three identical bills were filed during the special session to match Louisiana's law with South Dakota's in case the U.S. Supreme Court allows...

It passed a law requiring retailers with more than $100,000 in annual sales or 200 transactions in the state to pay a 4.5 percent tax.

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Only five states do not have a state-wide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

After states and traditional retailers have grumbled about this situation for years, South Dakota finally chose to do something to change it.

Amazon, by far the nation's largest online seller, is not a party to the case, since it now has a physical presence in many states, with warehouses, and pays the taxes.

Kennedy wrote that the 1992 precedent that affirmed that a physical presence is required - a case called Quill v.

The 5-4 decision is expected to help states collect billions more in sales tax each year.

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

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