The US Supreme Court on Friday said it will be important to deal with sales transactions – a case that will affect how customers are dealing with major e-commerce sites such as Wayfair, Overstock, and Amazon. The case, South Dakota c. Wayfair , will revisit a 1992 decision, Quill Corp. v. North Dakota , in which the court ruled remote sellers would have to collect state sales if they had a physical presence in a state, like a warehouse or an office. The court based on its ruling, in part, on the “dormant trade clause,” has a legal doctrine that prevents states from interfering with commerce. The Court’s decision came into existence in 1994 (and in 1994) and eBay (1995).
There’s a lot of cash at stake. The Government Accountability Office estimates that they could have collected up to $ 13 billion in 2017 Bloomberg notes. All but five states – Alaska, Delaware, Montana, New Hampshire and Oregon – imposes sales taxes, meaning South Dakota. Wayfair is a national issue.
Quill Corp. v. North Dakota, the first ruling, predates much of what has become a booming e-commerce industry today. According to the US Census Bureau , in 2016 total e-commerce sales in the United States were estimated at $ 394.9 trillion, which accounted for 8.1 percent of total retail sales. For some perspective: Fifteen years before , in 2001, total e-commerce sales were estimated to be $ 32.6 billion, which is about 1 percent of total sales. According to research firm eMarketer Amazon represents 43.5 percent of all US retail e-commerce sales; eBay accounts for about 6.8 percent.
A South Dakota law set off the court battle
In 2016, South Dakota passed a law that would allow it to collect sales taxes on its out-of-state online retailers. The state government then filed suitably with the courts – with an eye on the overturning the Quill decision . “States’ inability to effectively sell taxes imposed on the market by the seller.” South Dakota argued in its appeal to the Supreme Court.
South Dakota does not have an income tax, so it’s so affected by the Quill decision. In August, the state Said It had collected about $ 1.6 million since it was $ 50 million each year. Last year, the state faced a $ 33.7 million budget shortfall; South Dakota Governor Dennis Daugaard Said most South Dakota employees will be looking for the next two years.
The Supreme Court is likely to hear arguments in the springtime, with a possible ruling by the end of June. Three justices – Clarence Thomas, Neil Gorsuch, and Anthony Kennedy – Quill, Bloomberg points out. In 2015, Kennedy, often a swing vote on the court, said the decision said:
President Donald Trump has hit Amazon about this issue, Amazon is not exactly the problem
While e-commerce companies collecting sales taxes are not the most well-known issue, it has been pushed into the spotlight by President Donald Trump. Over the last year he’s lobbed accusations at Amazon on multiple occasions, claiming the company that’s not exactly the case .
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost! – Donald J. Trump (@realDonaldTrump) August 16, 2017
Tea #AmazonWashingtonPost What is the name of the restaurant? – Donald J. Trump (@realDonaldTrump) June 28, 2017
ace Bloomberg’s Spencer Soper, Matthew Townsend and Lynnley Browning wrote last August, Amazon on the Quill. In its relentless quest to find efficiencies, the company has built warehouses all over the country, meaning that it has a physical presence; the last year the company has collected taxes in all states that levy them. Amazon still, however, does not pay off when they buy products from one of its third-party vendors, which makes up a significant portion of its business.
Amazon backs to nationwide approach, but not so sure. Wayfair, Overstock, and Newegg are opposing South Dakota in its short-term, arguing that the burdens will fall primarily on small and medium-sized companies
But some legislators say that it’s the thing that’s keeping them from acting. A group of lawmakers – Sens. Mike Enzi (R-WY), Heidi Heitkamp (D-ND), Dick Durbin (D-IL), and Lamar Alexander (R-TN), along with Reps. Kristi Noem (R-SD) and John Conyers (D-MI) – signed a brief Supreme Court to hear South Dakota c. Wayfair and overturn Quill. They say that the Congress has been unable to reach a consensus on a legislative solution and that the deadlock is the result of “structural advantages and disadvantages created by the Quill decision.” In other words: If Quill goes away, they’ll be able to fix the underlying issues.
Consumers may not appreciate a new sales tax, but they are ready for more tax revenue. At the time of this writing, 35 states are supporting South Dakota’s short bid.