South Dakota vs. Wayfair – Answers to Your Online Sales Tax Questions

This blog was last updated on March 11, 2019

Last Tuesday, the Supreme Court heard oral arguments in South Dakota vs. Wayfair which challenges a precedent most recently articulated in the 1992 case of Quill vs. North Dakota. Quill affirmed that a business must be physically present (loosely defined as people or property) in a state before it can be compelled to collect and remit sales and use tax in connection with mail order or internet sales made to its residents.

In the digital age, states have increasingly come to view the physical presence standard as an anachronism, whose continued existence stymies their ability to fund their government. South Dakota contend they are losing millions of dollars in sales tax revenue every year under Quill and researchers estimate $34 billion in revenues lost nationwide. Without a doubt,  there are some compelling arguments favoring an overturn.

South Dakota vs. Wayfair Oral Arguments – Insights to Glean

So what’s top of mind for the Justices? Based on their questions asked last Tuesday, the national impact of an overturn is clearly being considered as opposed to focusing exclusively on what would happen in South Dakota. The possibility of states retroactively pursuing sellers for back taxes, and the burden/benefit to small sellers is also top of mind.

Will states find themselves in a situation where they’d be able to enact a rule that imposes collection obligation on a seller based on a single sale, or will they be weighing their options on how to expand collection responsibilities within the confines of Quill? How might a decision this summer impact governments and businesses, and what should each be doing to prepare? Find out this and more, take action below!