Last week in Wayfair vs. South Dakota, the Supreme Court decided that states may charge sales tax to online retailers, even if they do not have a physical presence in that state. This 5-4 decision reverses the decision made in 1992 in the Quill Corp vs. North Dakota case.
This new tax system will affect online retailers, consumers, and local businesses. Online retailers have changed the way American people shop, as e-commerce has become a huge part of the nation’s economy. By previously avoiding tax, consumers were drawn to purchasing goods online. The Supreme Court decision may now persuade consumers to make purchases in a physical store since the sales tax rate will be the same for online and other purchases.
Larger retailers like Amazon and Wayfair will be impacted more so than smaller, online retailers like Etsy. The ruling gives local businesses a chance to make a comeback against online moguls. Consumers just need to be mindful that they will have to start paying slightly more for their convenient online purchases.