Internet retailers face looming duty to collect out-of-state tax

Gigaom

Online shopping is hugely popular but not with state governments. For years, states have complained the internet shopping boom is costing them billions in tax revenue thanks to a long-standing law that prevents them from taxing distant retailers.

That’s set to change after a Tuesday Supreme Court decision that opens the door wide for states to expand their tax collection powers, and that will likely affect Amazon as well as smaller internet retailers.

In the ruling, Justice Anthony Kennedy said that the growth of the internet means it’s time for the top court to revisit a 1992 decision called Quill, which held that states can’t force a business to collect tax in a given state unless it has a physical presence there.

The Quill case, which was about mail-order catalogues, ensured that businesses didn’t have to worry about collecting and remitting taxes to dozens of different governments every time they made a distant shipment.

At the time, the decision was uncontroversial, presumably because…

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