The United States Supreme Court ruled Thursday that states have the authority to force online shoppers to pay sales tax; a move that could generate billions of dollars and significantly raise prices of commonly bought goods.
The 5-4 ruling strikes down a decades-old decision that impacted online sales; clearing the path for local governments to charge sales tax on goods regardless of whether or not the business has a “physical” footprint within its boundaries.
“Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” wrote Justice Anthony Kennedy.
The decision is a big win for major corporations such as Apple and Walmart, who generally pay sales tax due to their “physical presence” in most states throughout the country.