Quill Corp. v. North Dakota was the last time the Supreme Court took a state sales tax case. It reaffirmed previous rulings stating that a business only needed to collect sales tax in states where it had a physical presence. Some of the text from the landmark decision is inscribed on a wall at Avalara’s Seattle HQ. (GeekWire Photo / Nat Levy)
The U.S. Supreme Court is set to hear its first state sales tax case in more than 25 years this week and the verdict could have sweeping implications for e-commerce companies, like Amazon, and customers across the country.
The case, South Dakota v. Wayfair could finally clarify how online retailers are expected to collect sales tax in states where they have customers but may or may not have a “physical presence.”
In the past, the Supreme Court limited states’ power to collect sales tax to companies with a “physical presence” in that state but those decisions were issued before the online retail revolution. Limiting state taxing authority in that way made sense when the majority of sales were done by brick-and-mortar retailers.
Today, a company can make thousands of sales across the country while maintaining a physical presence in just one city. Local governments could have collected up to $13 billion in additional sales tax in 2017 if they had the authority to tax remote retailers, according to Bloomberg.
On April 17, the Supreme Court will review these standards given our new retail reality. The court’s decision is expected this summer.
What is this case about?
South Dakota passed a law in 2016 requiring online retailers to collect sales tax when they sell goods to the state’s residents. The state’s lawsuit under the legislation targets three online retailers: Wayfair, Overstock.com, and Newegg. Amazon hasn’t joined the lawsuit or filed a friend of …read more