On June 21, 2018, the Supreme Court overturned a 1992 decision that held that online purchases could not be taxed by states. The new decision, South Dakota v. Wayfair, held that a company with no employees, property or other presence besides selling online to customers in a given state could nevertheless be taxed by that state or any state in which it sells. This case overruled the earlier case, Quill Corporation v. North Dakota, which had been the law ever since the early days of online shopping. The basis for the prohibition was that taxation of companies with no business presence in a state other than sale “unduly burdened” interstate commerce. With the growth of online shopping and how it’s affecting brick and mortar stores, states were losing revenue from declining in-state sales.
Don’t expect the retailers to eat the additional expense of sales tax; just about every state that has a sales tax has enacted legislation to tax online sales, in the wake of the decision. A recent article on Taxfoundation.org lists when the various state laws are to go into effect. You can see that list here. One of the first things you might notice is that the effective date for most of the laws is in September or October of this year, just in time for the holiday shopping season. A few states, such as Louisiana, Georgia, Nebraska and Utah, are delaying imposition until 2019. If your state hasn’t enacted online sales tax yet, it might pay to shop early.