For years, states shied away from implementing internet sales taxes on persons or businesses without a physical presence in the state. However, this all changed in June 2018, when the U.S. Supreme Court upheld South Dakota’s internet sales tax law in South Dakota v. Wayfair, Inc. In effect, the ruling overturned the 25-year-old “physical presence” standard set in Quill Corp. v. North Dakota.
The Wayfair decision upturned decades of sales tax laws and opens the floodgates for a torrent of new sales taxes that states can impose on online businesses and consumers. In response to the decision, Alaska local governments are considering a new plan that would allow cities and boroughs in the state to collect from online purchases. Alaska, which has no state sales tax, would become the first state where local governments would be allowed to collect internet sales tax revenue.