On June 21, 2018, the U.S. Supreme Court (SCOTUS) issued its highly anticipated decision in the South Dakota v. Wayfair case. This decision is a big topic for those of us in the sales tax sector. Is this decision fair? It will affect taxpayers across the nation.
In a 5-4 decision, the Court ruled in favor of South Dakota and overruled Quill Corp. v. North Dakota and National Bellas Hess, Inc. v. Department of Revenue of Ill. The Court concluded that “the physical presence rule of Quill is unsound and incorrect.” This overruling is unprecedented since Quill had been the law of the land since 1992 regarding nexus for remote sellers and National Bellas Hess since 1967.
The Supreme Court moved to close that loophole, ruling that internet retailers can be required to collect sales taxes even in states where they have no physical presence.
What does this mean for retailers? It was a big win for brick-and-mortar businesses that have complained they are put at a disadvantage by having to charge sales taxes while many online competitors do not. It was also a big win for states that have said that they are missing out on tens of billions of dollars in annual revenue.
For consumers, the reversal of Quill could mean paying more for products bought online. In theory, most states already require consumers to pay a “use tax” equivalent to the state sales tax when buying online. But consumers do not always do so. The reason the fairness of this Supreme Court decision may be questioned is because the driving force behind our nation’s economy for the last 15 years has been Internet sales. This most likely will negatively impact small business innovation and its growth going forward.
Let us help you get through this big change and keep your business on a fair playing field. Please give us a call! (281) 358-1060
We know what we are doing,
Riley G. Epps
Founder and Managing Partner
State Tax Advisors, LP
About State Tax Advisors
State Tax Advisors is a privately owned multi-state sales and use, property, and franchise tax advisory service provider. It also offers non-tax advisory services such as: annual reports, contractor or business licensing. The Firm’s historical and current portfolio of clients include multi-national oil & gas firms, industrial manufacturers, construction companies, financial services and small-to-mid-range enterprise firms.