The Supreme Court granted cert in South Dakota v. Wayfair, Inc. today, paving the way for a possible overturn of Quill Corp. v. North Dakota, which prevents states from requiring companies without a physical presence (nexus) to collect their sales tax from in-state customers.
This has been presented as a big retailer versus small retailer issue, but large retailers and trade groups like the National Retail Federation and the Retail Industry Leaders Association are actually in favor of overturning Quill. That's because the big retailers have nexus in many states and are already collecting sales tax, unlike smaller online merchants and micro sellers.
Amazon is no longer a talking point for those favoring the overturning of Quill, since Amazon now collects sales tax for its own first-party sales.
Meanwhile ecommerce trade group NetChoice says states already have a way to collect taxes on purchases made by residents from out-of-state retailers - they require their own citizens to pay "use" tax for transactions in which out-of-state retailers don't collect the "sales" tax.
NetChoice Executive Director Steve DelBianco has said many thousands of smaller businesses would bear disproportionate burdens and costs if they are forced to become tax collectors for 12,000 jurisdictions across 46 states.
In defiance of Quill, some states have come up with laws requiring out-of-state retailers to collect sales tax on their behalf from in-state residents. And they are taking different approaches - such as
Washington state, which came up with a "marketplace facilitator" law that only solves part of the paperwork and remittance issues small sellers face.
These different rules and regulations only serve to highlight the quagmire online sellers face if they have to collect, track, and remit sales tax to 50 states and countless municipalities.
As for the National Retail Federation, it wants federal legislation to resolve the issue. It issued a statement today stating in part:
"The National Retail Federation welcomed the U.S. Supreme Court’s decision today to take up a South Dakota case on whether online sellers can be required to collect sales tax the same as local stores but also urged Congress to address the issue through federal legislation."
Update 1/12/18: eBay was quoted in
the Wall Street Journal: "EBay Inc. spokeswoman Penny Bruce said the company hopes the court will "clarify again that independent small businesses cannot be taxed in a state where they do not have facilities, employees or a voice in the local political process.""
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Supreme Court to Hear Online Sales Tax Argument
by: Ming the Merciless 