US law on online sales tax poised for court review

Wilmington, Delaware

THE South Dakota Supreme Court brought the question of whether online retailers should pay sales tax back into sharp focus.

The Mount Rushmore state's highest court ruled last Thursday that companies selling wares over the Internet can't be forced to collect South Dakota's 4.5 per cent tax on purchases, laying the groundwork for a US Supreme Court appeal that could change the law across the country. A decision forcing online retailers to collect such taxes could be worth billions in revenue to state and local governments.

The court backed an appeal by online retailers Overstock.com Inc, Wayfair Inc and NewEgg Inc challenging a state law that required companies that do more than US$100,000 worth of business in online sales in the state to collect sales taxes. The law ran afoul of the US S…