Three large retailers-Wayfair, Overstock and Newegg-do not, and South Dakota sued them for failing to collect taxes after the state's law went into effect.
The win was welcomed by groups representing brick-and-mortar retailers and decried by e-commerce advocates.
The court chose to overturn a 1992 decision that a physical presence was necessary to require retailers to collect and send sales taxes to a state.
The high court ruled Thursday to overturn those decisions. They said a decision in a case involving mail-order catalogues is obsolete in an era of e-commerce. The law could yet face legal challenges on other grounds, Kennedy noted.
The 5-4 ruling is widely seen as a victory for brick-and-mortar stores, who previously said that online retailers' ability to skirt sales tax collection gave them an advantage. It also likely will lead to many consumers paying more at the online checkout.
The ruling comes against a backdrop of Trump's criticism of Amazon, the leading player in online retail, on the issue of taxes and other matters.
Forty-five states rely on sales taxes for revenue, and for those states that have no income tax, sales taxes are very important. South Dakota's governor has said his state loses out on an estimated $50m a year in sales tax that doesn't get collected by out-of-state sellers. The law required out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state. However, Alaska and Montana allow individual individual cities to collect local sales taxes, according to the Tax Foundation.
"Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the states". Louisiana is beefing up its efforts to collect taxes on purchases made from out-of-state in...