SCOTUS Agrees To Review Internet Sales Tax Law

January 24, 2018

As you may have read, the US Supreme Court recently agreed to consider South Dakota v. Wayfair, a case which may undermine or reverse the 1992 Quill v. North Dakota decision which requires that a business have a physical presence in a state before that state may require it to collect and remit sales taxes. In 2016, South Dakota (SD) enacted sales tax legislation that violates the Quill standard of physical nexus by requiring out-of-state retailers with an “economic nexus” (i.e. selling more than $100,000 annually into the state or engaging in 200+ transactions with South Dakotans) to collect and remit SD sales taxes. SD then sued four online retailers who do not operate in the state (Newegg, Overstock, Systemax, and Wayfair) for non-collection. SD lost that case at the trial level and the appellate level…which is exactly the result the state wanted since it would mean quicker review of the Quill precedent by the US Supreme Court. 

Looking forward, we expect that oral arguments in the case will happen in April and that a final decision will come in June. It is impossible to know how the Court will rule, but we expect that the decision – regardless of outcome – will be consequential to remote retailers. The eBay Government relations team will continue to fight against unfair tax burdens for small, internet-enabled retailers and will keep you informed as this issue progresses.