South Dakota vs. Wayfair – Webcast Questions Answered

Alex Forbes
May 14, 2018

The other day we provided a recap of our Wayfair webinar, “South Dakota vs. Wayfair and What it Means for eCommerce,” with regulatory analysis expert Chuck Maniace. The following are questions from our attendees, some of which we had to take offline due to time constraints. Please find those additional questions, answered below, and be sure to subscribe to the blog for future updates and upcoming webinars on this and other related topics.

Q: Is there any way for SCOTUS to force the hand of Congress to act, and we’ll be in limbo for another 2 … 4… 20… 100 …years?

Chuck Maniace: The Court cannot technically tell Congress to do something. In other words, they could not opt to uphold Quill and require Congress to pass a law that creates a new standard that compels certain types of remote sellers to collect. There was a lot of discussion about how Congress (right now) may be disinclined to act based on the political reality that overturning Quill will be viewed by many as a tax increase. However, if the Court overturns Quill then any action by Congress that (later) creates a standard that would set some minimum requirements before imposing tax will be viewed as protecting small business. So, while the Court can’t force Congress, they can definitely exert some strong influence.

In my mind – I have been thinking of this concept as effectively advocating for “government by emergency.” Maybe the term “emergency” is too strong – perhaps the argument is best viewed as adjusting incentives.

Q: The reality for small sellers is that while the SOFTWARE is affordable, the management of all the data and getting it into the software CORRECTLY is extremely complex. Plus, you need to have a tremendous amount of knowledge and time in order to correctly configure this across your selling platforms. Is there any channel for a REAL small seller to communicate the reality of how complex this is? Meaning, communicate this to the legislators? And other factors like a SMLLC (Single Member LLC) also gets income tax nexus (and needs to pay $20k in fees to file their personal tax returns) because they have inventory in Amazon FBA? So how do we make our voice heard?

CM: At this point, the opportunity to influence the Supreme Court has passed. In fact, it’s extremely likely they have already made their decision, but we won’t hear about it until June after they have written an official opinion they are ready to publish. But, assuming the Court does overturn Quill, states will need to consider when (practically) they will start expecting remote taxpayers to comply. While some states have rules already on the books that would technically kick in the minute the Court makes their decision, a few short days ago, I sat in a meeting of the Streamlined Sales Tax Governing Board where a panel of tax software providers and other regulatory experts strongly encouraged states to think about giving companies (who may still not even know that all this is happening) time to get their house in order before imposing this requirement on them.

Q: Could the overturn of Quill not only affect eCommerce, but also businesses making sales to other states that they are currently not registered in because have no Nexus in the other state?

CM: Yes – if the Court were to overturn Quill it seems likely they would do so in a way that impacts both ecommerce sellers and other sellers equally. In the written brief filed by the Solicitor General of the United States, the suggestion was made that the Court could rule in a way that treats ecommerce differently from other types of commerce. However, neither party to the case made this argument and it certainly was not discussed during oral argument.

Q: Will foreign companies be impacted as well? For example, EU-based businesses with no FEIN or establishment in US?

CM: Yes – if the Court eliminated the physical presence requirement, sellers outside the United States could be obligated to collect and remit sales tax in the same way as sellers located within the United States. Of course, there are practical issues that would make auditing a foreign seller very challenging for a state government. What is interesting to note is that a large part of the rest of the world is already there. For example, sellers located within the United States providing electronic services to private individuals located within the European Union have a VAT collection obligation today – with the EU providing a simplified process to make it manageable.

Q: What do you think the Court will decide?

CM: Prognostication based on oral arguments is a very difficult thing. When the Supreme Court decided to take this case, that means at least four Justices had to be interested in hearing this argument. One would have thought (I certainly thought) if the Justices simply wanted to keep Quill they would have denied the option to hear this case – referred to as “denying certiorari” in legalese. But they took the case. When they did, almost everybody (including me) thought this was a clear path to overturning Quill. In reality, once oral arguments happened a lot of commentators said, “Wait a second, the Justices have a lot of critical questions – maybe they are not ready to overturn their own precedent.” I would urge caution…

Often Justices will ask the most challenging questions to the parties they may agree with because they want to get the arguments framed correctly in their head, and be able to articulate the legal rationale to support their decision. Based on the arguments I tried to place Justices in varying camps – for and against. On my scorecard, there were 3 justices that seemed against and 3 Justices in favor. As is his modus operandi, Justice Thomas did not say a word so he is hard to read, but most commentators suggest his past writings infer he would overturn Quill. Justice Roberts (the chief justice) asked probing questions on both sides of the argument and he may indeed be the swing vote here….we’ll know soon enough. 

Take Action

Visit our Intelligent Compliance Blog and resource center to subscribe to weekly updates, and be among the first to RSVP to our Chuck Live SD v Wayfair Decision webinar immediately following the final Supreme Court ruling!

Ready to learn how Sovos can safeguard you from constant regulatory and business change? Contact Us.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Alex Forbes

Alex Forbes is Senior Manager, Content Marketing, at Sovos. When not helping readers navigate their tax-related digital business transformation journeys, he enjoys day tripping around New England with his wife.
Share This Post

North America Sales & Use Tax
June 5, 2023
Sovos Onboarding: 6 Departments Dedicated to Customer Success

If you are evaluating Sovos, we want you to understand expectations for the customer experience and what teams are there to support you. At Sovos, we have a range of teams ready to support you from the day you sign a contract. Whether it be a customer success representative to review the value you are […]

North America Sales & Use Tax
June 1, 2023
3 Things to Remember if You Get a Sales Tax Notice

Have you ever received a sales tax notice from a state department of revenue? Whether you answered yes or no, there are important things to keep top of mind to help keep your business prepared. Finding out that you have failed to comply with one or more of your sales tax obligations can be startling. […]

EMEA VAT & Fiscal Reporting
May 31, 2023
Bizkaia: What is Batuz LROE?

The Ledger of Economic Operations (Libro Registro de Operaciones Económicas), also known as LROE, is a main compliance element of the Batuz tax control system. This system is under implementation in the province of Bizkaia, located in the autonomous Basque community in Spain. Taxpayers under the Batuz mandate must comply with both TicketBAI and LROE […]

North America Unclaimed Property
May 30, 2023
How to Set Up a Successful Unclaimed Property Program

Unclaimed property compliance can be difficult and overwhelming. Clients often ask what they should be doing to ensure they are compliant with the various laws and regulations. It isn’t easy, especially if you have multiple property types such as checks, credits or customer accounts that have the potential to become unclaimed property in multiple states. […]

North America ShipCompliant
May 30, 2023
How Hold At Locations Improve Your Customers’ Wine Delivery Experience

Direct-to-consumer shipping wine lovers enjoy the convenience of having their favorite vinos shipped to their front door. But what happens when, for whatever reason, they aren’t available to accept their wine deliveries? Whether they aren’t available during the day or they don’t have someone 21 or older available to sign for their package, these challenges […]