The U.S. Supreme Court ruled Thursday, June 21, that states can now require internet retailers to collect sales taxes.
South Dakota, the state that had asked the Supreme Court to rule on a law it passed imposing an internet sales tax, called the ruling a victory. In decades of prior rulings the Supreme Court had barred states from imposing any taxes on sales from out-of-state internet retailers.
The impact on state revenues could be significant. South Dakota projects that states could add as much as $34 billion a year to state coffers based on the Supreme Court ruling, the U.S. Government Accountability Office estimates the sales tax revenue figure could be lower, projecting it at closer to $13 billion.
A growing chorus of state, county and municipal governments has voiced concerns that the revenue going to out-of-state internet retailers is impacting local sales tax revenue that funds schools, hospital and library districts, and fire and emergency services as well as recreation and public works projects.
“Our state is losing millions for education, health care and infrastructure, and our citizens are harmed by an uneven playing field,” said Marty Jackley, South Dakota’s attorney general.