Which statement about the ability of individual states to collect sales tax on Internet transactions is true?

A) Individual states may, without restriction, collect sales tax from merchants on items purchased through the Internet by in-state residents.
B) Only with permission of Congress, granted on a state-by-state basis, may individual states collect from merchants sales tax on items purchased through the Internet by in-state residents.
C) States cannot collect sales tax on Internet sales from merchants nor may a state require that its citizens report Internet purchases so that they may be taxed.
D) A state cannot collect sales tax from merchants unless sales to the state's citizens amount to more than 1 million in the aggregate.
E) A state can collect sales tax from a merchant only if the merchant has a store or distribution center in the state.

Question

Victoria Padilla · Accepted Answer

Final Answer : E, Explanation :  A state can collect sales tax from online transactions if the merchant has a physical presence, such as a store or distribution center, within the state. This principle was established in the U.S. Supreme Court case Quill Corp. v. North Dakota (1992) and was further addressed in South Dakota v. Wayfair, Inc. (2018), which allowed states to charge sales tax on out-of-state sellers even without a physical presence, but the key factor remains the nexus with the state, which can include physical presence or significant economic presence.

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