The U.S. Supreme Court will consider a number of tax-free zones to collect billions of dollars from online retailers, agreeing to revisit a 26-year-old ruling. He said that he will be listening to South Dakota’s contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned. State and local governments could have collected up to $ 13 billion in 2017 if they had been allowed to sell by the Government Accountability Office. Other estimates are even higher. All but five states imposes sales taxes.
Online retailers Wayfair Inc., Overstock.com Inc. and Newegg Inc. are opposed to South Dakota in the short fight. Each collects sales tax in some states. The case will also affect Amazon.com Inc., though the biggest online retailer is not directly involved. When selling its own inventory, Amazon taxes the sales of goods by the third party merchants. For those items, the company says it’s up to the sellers to collect any taxes, and many do not. The court will probably hear arguments in April with a ruling by the end of its nine-month term in late June. ‘Physical Presence’ The high court 1992 Quill c. North Dakota ruling, which involved a mail-order company, said retailers may be forced to collect taxes where the company has a “physical presence.” The court invoked the so-called dormant trade clause, a judge-created legal doctrine that bars states intersting with interstate commerce unless authorized by Congress. South Dakota passed its law in 2016 with an eye to overturning the Quill decision. It requires retailers with more than $ 100,000 in a 4.5 percent tax on purchases. Soon after enacting the law, the state filed and asked the courts to declare the constitutional measure.
“States’ inability to effectively sell taxes imposed on the market by the seller,” South Dakota said in its Supreme Court Appeal. Wayfair, Overstock and Newegg said the court should reject the appeal and leave it to the taxpayer. Expressing Doubts “If Quill is overruled, the burdens will fall primarily to small and medium-size companies, which will be stifled,” the companies argued. “Congress can address this issue in a balanced and comprehensive way through legislation.” Those supporting South Dakota at the high court include 35 other states, which lawmakers who say they’ve been trying to get Congress to address the issue. Overturning Quill would mean “leveling the playing field for businesses who are employing people on Main Street,” Senator Heidi Heitkamp, at North Dakota Democrat, said in an interview. Heitkamp was North Dakota’s tax commissioner during its unsuccessful fight for taxing power in the Quill case.
The National Retail Federation, which represents both the brick-and-mortar and Internet-only sellers, said it was encouraged by the court’s decision to get involved. “We are hopeful it will lead to a positive outcome that reflects the realities of 21st century commerce,” the trade group’s chairman, Matthew Shay, said in a statement. Three Current Justices – Clarence Thomas, Neil Gorsuch, and Anthony Kennedy – Quill. Kennedy said in 2015 that Quill had produced a “startling revenue shortfall” in many states, and “unfairness” to local retailers and their customers. “A case questionable even when decided,” Kennedy wrote. “It should be left in place only if it is powerful enough that its rationale is still correct.” Gorsuch, the Supreme Court Supreme Justice, suggests skepticism about Quill as an appeals court judge. And Thomas said he would jettison the entire dormant trade clause, saying “it has no basis in the Constitution and has proved unworkable in practice.” Amazon backs to nationwide approach that would relieve retailers from dealing with a patchwork of state laws. Amazon ounce relied on the Quill Ruling and did not collect sales tax at all; the company has become more established as a whole country, giving it a greater physical presence in multiple states. The case is South Dakota c. Wayfair, 17-494. For more on Amazon, check out the Decrypted podcast:
– With assistance by Spencer Soper