Yesterday, the U.S. Supreme Court overturned the precedent set in 1992 following from the ruling in the case of Quill Corp. v. North Dakota that allowed internet companies with no physical presence in a state, otherwise known as “nexus,” to forgo collecting sales taxes. The review of the law was prompted by South Dakota suing online retailers Wayfair, and Newegg for violating a 2016 law that said retailers who have $100,000 in sales or 200 separate transactions in the state have “economic nexus,” and are, indeed, required to collect taxes.

In the 5-4 ruling, Justice Kennedy wrote that “Last year e-commerce retail sales alone were estimated at $453.5 billion. Combined with traditional remote sellers, the total exceeds half a trillion dollars,” and said that the law requirement of a physical presence in a state, “limited States' ability to seek long-term prosperity and has prevented market participants from competing on an even playing field."

In 2017, the National Conference of State Legislatures cited more than $17 billion in lost sales taxes each year due to the law.

Yesterday’s ruling, in effect, leaves a void in the way in which many states will collect sales taxes; some states, such as Washington, Pennsylvania, Colorado and the aforementioned South Dakota have laws in place governing taxation of online sales, while others will need to pass laws governing taxation of online sales. Forty-five states have sales taxes, while five — Alaska, Delaware, Montana, New Hampshire Oregon – do not; in addition, many states allow local sales taxes to be levied by city or municipality, further complicating the matter.

One group that has applauded the Supreme Court ruling is the American Booksellers Association, which has underscored that online retailers, and in particular, have used tax laws to gain what they have seen as unfair advantage. “Today’s ruling represents a tremendous victory for independent booksellers and for indie retailers throughout the country,” said Oren Teicher, ABA CEO. “This is a critically important milestone; and is testimony to the perseverance and persistence of so many indie booksellers and our allies who have fought this fight for more than two decades. We are delighted that the playing field has finally been leveled and it is now official government policy to treat all retailers equitably.”

While, as of March 2017, Amazon has collected sales tax in all the states where it is required to do so, a recent report commissioned by the ABA, in conjunction with Civic Economics, points out the sales on Amazon’s Marketplace, where many resellers appear not collect sales tax, has resulted in more than $5 billion in lost sales tax revenue.Last year, South Carolina sued Amazon for $12.5 million in uncollected taxes on Marketplace sales in 2016.

Amazon’s stock price fell more than a percentage point after the Supreme Court’s ruling was announced, while the share prices of other online retailers fell even more.That said, who will ultimately benefit most from the ruling remains to be seen. Some have claimed that the ruling favors Amazon, as competitors who currently do not collect taxes, may be forced to do so, thus raising the final cost to the consumer. Independent booksellers who generate a significant amount of out-of-state revenue, in form of sales through a a signed,, first-edition book club, for example, may be affected.

Many smaller sellers may also continue to skirt the law due to a lack of enforcement, while others may be stymied on how to do so — a problem acknowledged by Justice Roberts in his dissent. “One vitalizing effect of the internet has been connecting small, even ‘micro’ businesses to potential buyers across the nation,” he wrote. “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.”

The National Retail Federation (NRF), another supported of online sales tax, has noted that there is software widely available that is free or low-cost that automatically calculates the necessary sales tax for the seller; Amazon itself launched a service last year, Marketplace Tax Collection, to do just this.

The NRF applauded yesterday's decision. “Retailers have been waiting for this day for more than two decades. The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well,” said the NRF president and CEO Matthew Shay. “This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.”

One solution to resolve any confusion around the issue would be for Congress to pass an overarching law governing the issue of online taxation, something unlikely to happen anytime soon in divisive political environment.