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In a landmark decision, the Arizona Supreme Court ruled in favor of an online retailer in a case involving sales tax collection on Thursday, March 23, 2026. The ruling has significant implications for e-commerce businesses operating in the state and could potentially set a precedent for similar cases nationwide.The case, brought before the court by the Arizona Department of Revenue, centered around whether the online retailer was required to collect and remit sales tax on purchases made by Arizona residents. The state argued that the retailer had a physical presence in the state through its use of third-party delivery services, making it subject to Arizona's sales tax laws.However, the court ultimately sided with the online retailer, citing a previous U.S. Supreme Court decision that established a precedent for when states can require out-of-state businesses to collect and remit sales tax. In the 2018 case, South Dakota v. Wayfair, the Supreme Court ruled that states could only require businesses to collect sales tax if they had a substantial nexus to the state.In its decision, the Arizona Supreme Court determined that the online retailer did not have a substantial nexus to the state and therefore was not required to collect and remit sales tax on purchases made by Arizona residents. The court emphasized that the use of third-party delivery services did not constitute a physical presence in the state under the Wayfair ruling.The ruling is a major victory for online retailers, who have long argued that being subject to varying sales tax laws in each state would create an undue burden on their businesses. It also sets a precedent for how states can enforce sales tax collection on out-of-state businesses in accordance with the Wayfair decision.The Arizona Department of Revenue expressed disappointment with the court's decision but indicated that it would respect the ruling and work to ensure compliance with sales tax laws in other ways. The decision is likely to have far-reaching implications for e-commerce businesses operating in Arizona and could potentially impact how other states approach sales tax collection in the digital age.