Last week the U.S. Supreme Court found in favor of the state of South Dakota in South Dakota v. Wayfair, Inc., overturning a 1992 Quill decision that required businesses to have a physical location in a jurisdiction for the state to collect sales tax. In a 5-4 vote, the Supreme Court overturned the ruling because the 1992 case no longer applied in an era of ecommerce.

This new ruling means state and local governments can require internet sellers to collect sales tax, even if they do not have a physical location. Justice Anthony M. Kennedy said the Quill decision could be causing states to lose tax revenue of up to $33 billion annually.

President Donald Trump tweeted about the ruling.

In April 2017, Amazon began collecting sales tax nationwide in the 45 states with sales tax, reports The Verge. Alaska, Delaware, Montana, New Hampshire and Oregon do not have a state sales tax. As Amazon has grown, it has added more physical locations in different states, so it was required to collect sales tax in those states anyway.

In a blog post last week, Josh Silverman, CEO of Etsy, commented on the Supreme Court’s decision.

‘While today’s decision is not the one for which we advocated, the Supreme Court did acknowledge the important difference between big internet retailers and the creative entrepreneurs on our platform. Chief Justice John Roberts echoed our stance in his dissent, stating “The burden will fall disproportionately on small businesses. One vitalizing effect of the Internet has been connecting small, even ‘micro’ businesses to potential buyers across the Nation. People starting a business selling their embroidered pillowcases or carved decoys can offer their wares throughout the country-but probably not if they have to figure out the tax due on every sale,”‘ wrote Silverman.

According to Silverman, three-fourths of Etsy sellers are solopreneurs without staff or resources to manage their microbusinesses. Silverman is asking such businesses to sign a petition to draw attention to the unique challenges of their type of business.

‘We will continue to stand with our community of 2 million sellers, urging Congress to thoughtfully consider today’s decision and act swiftly and in the best interest of the microbusinesses they represent,’ said Silverman.

Here is an excerpt of the petition:

eBay also issued a statement, urging Congress to provide ‘clear tax rules, with a strong small business exemption.’

‘The Court was very clear about the importance of protecting small businesses from unfair burdens. If state tax authorities attempt to subject remote small businesses to audits and lawsuits, there will be increased litigation across the country to protect small business from unfair burdens.

Now is the time for Congress to step in and provide clear tax rules, with a strong small business exemption, to help small businesses take advantage of the Internet to grow and create local jobs,’ wrote eBay in a June 21 statement.

Wayfair, who issued its own statement about the ruling, does not expect a significant impact on business.

‘We welcome the additional clarity provided by the Court’s decision today. Wayfair already collects and remits sales tax on approximately 80 percent of our orders in the United States, a number that continues to grow as we expand our logistics footprint. As a result, we do not expect today’s decision to have any noticeable impact on our business, as it may on other retailers who do not currently collect and remit sales tax,’ Wayfair said in a news release.

Insider Take:

This ruling will impact subscription businesses, particularly subscription boxes and small retail sellers on sites like Etsy who utilize subscription tools to manage their businesses. The biggest challenge for those businesses will be the collection and remittance of state and local sales taxes, which could be an administrative burden for solopreneurs and similar small businesses. It will be interesting to see if Etsy will gain any traction with its petition to exempt small businesses from the new ruling.