The US Supreme Court justices will hear arguments in the case of South Dakota v. Wayfair, Inc. today. If a business is shipping to a state where it doesn't have an office, warehouse or other so-called physical presence, it doesn't have to collect the state's sales tax. But other online sellers can often sidestep charging sales tax.
Congress weighed in on the issue a year ago, as a bipartisan group of senators introduced the Marketplace Fairness Act, legislation that would require all businesses selling online to collect sales tax for the state where the consumer making the purchase resides.
Justice Elena Kagan said that it might be better if the Supreme court did not rule on the case because it could be better decided by the legislature: "Congress is capable of crafting compromises".
"This case is largely about whether collecting sales tax is an undue burden on interstate commerce", NRF President and CEO Matthew Shay said.
According to Warnke, the online retailers who do not tack on sales tax have an innate advantage over brick-and-mortar stores, thanks to a lower price.
In 1967, when the Court first considered this issue, consumers received paper catalogs in their mailboxes in front of their houses every day.
But retailers believe that overruling Quill will force retailers to comply with thousands of complex and variable state and local sales tax regimes. "Both brick-and-mortar stores and e-commerce leaders understand that the Marketplace Fairness Act is common-sense legislation dedicated to protecting states' rights, strengthening our communities and preserving our free market system".
Kimberly Jansen, a partner at Hinshaw & Culbertson LLP, gives her analysis on South Dakota v. Wayfair. The court reaffirmed the rule in 1992. In 2017, Amazon began collecting sales tax in every state that has one, even though it was not legally required to. On Tuesday, Justice Ruth Bader Ginsburg seemed willing them to join them, suggesting the court's past decisions were "obsolete precedent". "The result has been a startling revenue shortfall in many States, with concomitant unfairness to local retailers and their customers who do pay taxes at the register". The time has come for the U.S. Supreme Court to do just that.
In the early days of ecommerce, nearly no online merchants collected sales tax, a savings for consumers that helped to offset shipping costs.