US Supreme Court rules on online sales tax

The US Supreme Court has overturned a ruling that had given online retailers a way of avoiding some state taxes.

NY Times: Supreme Court Clears Way to Collect Sales Tax From Online Retailers

Internet retailers can be required to collect sales taxes in states where they have no physical presence, the Supreme Court ruledon Thursday.

Brick-and-mortar businesses have long complained that they are disadvantaged by having to charge sales taxes while many of their online competitors do not. States have said that they are missing out on tens of billions of dollars in annual revenue under a 1992 Supreme Court ruling that helped spur the rise of internet shopping.

On Thursday, the court overruled that ruling, Quill Corporation v. North Dakota, which had said that the Constitution bars states from requiring businesses to collect sales taxes unless they have a substantial connection to the state.

This could be significant for New Zealand. If internet retailers like Amazon have to comply with all the state taxes in the US (a complex thing) depending on the location of the purchaser,then it should be simple to also comply with tax requirements for other countries.

Writing for the majority in the 5-to-4 ruling, Justice Anthony M. Kennedy said the Quill decision had distorted the nation’s economy and had caused states to lose annual tax revenues between $8 billion and $33 billion.

But there could be a downside. If online retailers are forced to charge more tax in the US they may look for more sales in places where they can get away without charging tax.

Leave a comment


  1. Gezza

     /  22nd June 2018

    Seems to be a fair decision. Will probably help save a few low paid jobs for US blacks for a bit longer.

    • David

       /  22nd June 2018

      What about all the low paid US blacks who will lose their jobs because the extra tax people are paying doesn’t give them enough money for more fast food?

      • Gezza

         /  22nd June 2018

        Are you kidding. The middle classes will be pouring in to fast food outlets because the extra tax they’re paying means that’s all they can now afford.

    • David

       /  22nd June 2018

      Just to add, this will put a lot of small online companies out of business. The compliance cost for this will be a hundred thousand or so per year. At a minimum, a company will need to file returns in every state, regardless of if they did business there or not.

      48 GST returns. Fun.


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