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In the original lawsuit, South Dakota sued three major online retailers: Wayfair, Overstock, and Newegg.

The Supreme Court overrules the Quill case, which previously set the precedent for collecting sales tax from online sellers.

The court's 5-4 ruling, issued Thursday, overturns a 1992 decision that held states can only tax businesses with a physical presence in the state.

The high court has said for more than 50 years in various rulings that states can not collect taxes from sellers without a "physical presence" in those states.

The Supreme Court's ruling was praised by a number of retail groups, organizations representing state and local governments, right-leaning think tanks such as the Tax Foundation and American Enterprise Institute, and a bipartisan group of lawmakers.

Online retailers have long enjoyed an advantage over brick-and-mortar stores because of a 1992 Supreme Court ruling in Quill v.

"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States", he wrote, calling the physical presence rule "an incorrect interpretation of the Commerce Clause".

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E-commerce now makes up about 10 percent of US retail sales, according to the Commerce Department. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third-party sellers who use the site don't have to.

"We're reviewing the decision", was all agency rep James Gazzale said in an emailed statement. -North Dakota ruling, which found states could not require out-of-state retailers to collect sales tax if they had no "physical presence" in the state. Prior to the ruling, if you lived in NY and bought a TV from a retailer like Newegg - which has no physical stores in NY state - you wouldn't have to pay sales tax on your purchase. Retailer eBay warned that taxing Internet sales would place "crushing burdens on small online businesses, causing many to curtail operations and damaging the national economy".

Only five states do not collect a statewide sales tax. Some states that lack a broad sales tax, including New Hampshire, Montana and Washington, had submitted arguments to the court taking the opposite position.

Justice Anthony Kennedy wrote the majority opinion, supported by most of the Court's conservatives and, somewhat surprisingly, Ruth Bader Ginsburg.

Chief Justice John G. Roberts Jr. dissented in an opinion joined by Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan.

Already, South Carolina expects to collect about $346 million in sales taxes from online sales in 2017-18, according to an October analysis by the state's Revenue and Fiscal Affairs Office. "Big victory for fairness and for our country".

More than 40 states had submitted testimony in favor of upholding the South Dakota law. "Issues regarding smaller mom-and-pop retailers, and the amount of sales necessary to impose the collection obligation on them, would be decided on a case-by-case basis", he said. First, the Act applies a safe harbor to those who transact only limited business in South Dakota.


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