A United States Supreme Court ruling issued Thursday means Montana businesses may have to start collecting a sales tax when they sell their products online.
The order from the Supreme Court strikes down previous rules that said states could not collect sales tax from a business if that business did not have a physical presence in the state.
Montana is one of five states without a general sales tax, and this ruling will only impact businesses that sell online with out-of-state customers.
Dick Barrett is a Democratic State Senator from Missoula and a former professor of economics at the University of Montana.
“Those kinds of businesses that are selling out of Montana, online, into other states, may lose a little bit of a competitive advantage that they might have had because they were not required to charge other state’s sales taxes,” Barrett says.
Barrett is a member of a group of lawmakers studying how the state’s current tax system captures revenue in a changing economy, including changes do to the growth online business and e-commerce.
Although he does not support a general sales tax in the state, he expects others could use this ruling in support of their arguments for a sales tax to increase state revenue.
In April, Montana’s Attorney General Tim Fox filed a brief with the Supreme Court opposing this reversal of applying a sales tax to internet sales.
Although Montana opposed the change, more than 40 states, and the Trump administration, requested the court rule in favor of allowing them to collect a sales tax from business without a physical presence in their state.
In a statement issued Thursday, Fox said the court’s order will be bad for Montanans buying products online from other states, as well as small business selling online outside the state.
Governor Steve Bullock also expressed disappointment in the ruling, saying it will undoubtedly impact small businesses in Montana, although the extent of that impact unclear.
It is also unclear, according to Montana Department of Revenue Officials, if the court's ruling could mean that Montana’s resort communities which have adopted a local option sales tax will have to start imposing those taxes on their online sales.
A spokesperson for the department said the state is still reviewing the court’s decision.