US Online Shopping Is About To Get More Expensive

Online shopping is likely to get more expensive in America soon. The United States Supreme Court ruled Thursday that states may now require online retailers to collect state sales taxes. The 5-4 decision sided with the state of South Dakota against online retailers Wayfair, Overstock.com, and Newegg.

CNET reports that this overturns a standing 1992 decision that prevented states from collecting sales tax from online retailers that had no physical presence in their state. Instead, consumers themselves were expected to voluntarily submit the required taxes--and many did not.

States have long complained that they were losing millions in tax revenue, while giving online retailers an advantage over brick-and-mortar shops. This ruling is likely to lead other states to start requiring sales tax from online retailers, which in turn will be required from the consumer at checkout.

In the majority decision, Justice Anthony Kennedy noted that the realities of consumer habits have changed drastically since the 1992 decision. Mail-order sales in 1992 were only $180 billion, while online sales last year topped $450 billion. Kennedy also said the previous ruling effectively created tax shelters for retailers. In a dissenting opinion, Chief Justice John Roberts argued that this change could disrupt online marketplaces as a whole, and therefore should be in the hands of Congress rather than the courts.

South Dakota's suit stemmed from a law requiring sales taxes for any out-of-state seller that delivers more than $100,000 worth of goods. That position was to target huge retailers, without hitting smaller shops who sell their wares through eBay and Amazon.

Stocks for several major online retailers dropped in response to the news, including Amazon, Wayfair, and eBay.