Indiana online sales tax law faces legal fight

Indiana will likely end up in court over an online sales tax law.

The Indianapolis Star reports that Indiana lawmakers passed a law this spring claiming the state has a right to collect sales taxes from companies using only online transactions.

But a 25-year-old Supreme Court case prohibits states from collecting sales tax from businesses unless they have a physical presence in the state.

This means states are losing out on sales taxes, one of its larger sources of revenue. More than 40 percent of Indiana’s $18 billion revenue in 2016 came from sales tax.

Republican Sen. Brandt Hershman of Buck Creek who sponsored the Indiana bill says he anticipates further litigation.

The state has made agreements with nearly 2,000 companies, including Amazon, to collect some online sales tax.