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Supreme Court rules states can collect tax from online sales

Tammy Whitehouse | June 21, 2018

Tax departments could soon face a mountain of new activity to collect and remit state sales tax after a U.S. Supreme Court decision overruled longstanding case law regarding nexus.

In South Dakota vs. Wayfair, the Supreme Court decided states are entitled to collect tax on sales that occur within their boundaries, even when the seller does not have a physical presence, or nexus, in the state. The narrow, 5-4 decision reverses a 1992 Supreme Court decision in Quill vs. North Dakota, where the court found a selling entity should have nexus, or a physical presence of some kind, inside the state borders in order for the state to collect sales tax on a transaction.

State authority to collect sales tax has been a matter of legal debate since the advent of the internet and the ability of companies to do business with customers online. States have long wanted to collect tax on sales...

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