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States Can Require Online Sellers to Collect Sales Tax, Supreme Court Rules

The decision was 5-4 regarding an issue that has been closely watched by brick-and-mortar jewelers.

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A new U.S. Supreme Court ruling means states can force online retailers to collect sales tax just as brick-and-mortar stores do.

The decision, which reverses a South Dakota ruling from 1992, was 5-4, CNN reports.

Justice Anthony Kennedy, who wrote the majority opinion, stated: “The Internet’s prevalence and power have changed the dynamics of the national economy. The expansion of e-commerce has also increased the revenue shortfall faced by States seeking to collect their sales and use taxes.”

The issue has been closely watched by brick-and-mortar jewelers facing increased competition from online jewelry sellers.

In a statement, Jewelers of America explained that the 1992 ruling that was overturned had “established the current system under which states are prohibited from collecting sales and use taxes from sellers that do not have a physical presence in-state that led to the current uneven playing field between traditional and online sellers.”

The organization said it “applauds the decision.”

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“This historic decision from the Court in support of sales tax fairness is a major victory for the jewelry industry, providing a clear path to level the playing field between traditional and online retailers,” said David J. Bonaparte, JA president and CEO. “Now Congress must respond by passing federal legislation to create a universal federal framework for sales and use tax collection in a way that benefits businesses regardless of the state where their business resides and avoids a patchwork of state-by-state laws.”

Read more at CNN

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