US court backs states over web sales tax

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The top court in the US has ruled that states can force online companies to collect sales tax from their customers.

Previously, companies without a physical presence in a state were exempt from sales tax collection requirements.

The Supreme Court said the physical presence rule was “unsound and incorrect”.

It ruled that the provision amounted to a “judicially created tax shelter” that put some companies at an advantage.

In a 5-4 opinion, the court wrote that the physical presence rule “each year… becomes further removed from economic reality and results in significant revenue losses to the states”.

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