In a 5-4 ruling, the court overturned a 1992 court precedent barring states from requiring businesses that have no physical presence in the state to collect their sales taxes, reports The Hill.
Justice Anthony Kennedy, who delivered the decision Thursday, said that the exemption didn't make sense in light of the rise of digital firms.
"Between targeted advertising and instant access to most consumers via any internet-enabled device, 'a business may be present in a state in a meaningful way without' that presence 'being physical in the traditional sense of the term," Kennedy said.
"A virtual showroom can show far more inventory, in far more detail, and with greater opportunities for consumer and seller interaction than might be possible for local stores."
The court's decision upholds a 2016 South Dakota law that requires online retailers to collect sales tax if they make at least $100,000 annually in sales in the state or conduct at least 200 transactions a year with its residents.
Companies like Wayfair, Overstock and Newegg challenged the law, arguing that eliminating the 1992 precedent could create chaos for online retailers who would have to navigate a myriad of tax codes across the country.
Trump's reaction: President Trump who has repeatedly lashed out at the biggest online retailer of them all, Amazon, hailed the decision.
Big Supreme Court win on internet sales tax - about time! Big victory for fairness and for our country. Great victory for consumers and retailers.— Donald J. Trump (@realDonaldTrump) June 21, 2018
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