SCOTUS Considers Internet Sales Tax

Chris Gaetano
Published Date:
Jan 16, 2018

The state of South Dakota will square off against online retailers  Wayfair Inc., Inc. and Newegg Inc. before the U.S. Supreme Court over the question of state authority to level taxes for online sales, according to Accounting Today. The court, specifically, will consider whether to overturn the 1992 case Quill vs. North Dakota, which previously ruled that that an out of state company cannot be compelled to collect sales or use tax if it does not have a physical presence in the state. South Dakota is arguing that the ruling is obsolete, as online retail had not yet become the massive force that it is today. The state developed its own online sales tax law in 2016 with a specific eye on getting a Supreme Court challenge: once the measure passed, the state then filed suit asking the courts to declare it unconstitutional. The retailers, for their part, are arguing that the courts should leave the matter to Congress to decide. 

The U.S. Census Bureau reports that online transactions has more than doubled in the past decade, going from 3 percent of total retail sales in 2006 to 7.5 percent as of 2016. This has been driven by people relying increasingly on sites like Amazon or e-Bay versus brick and mortar establishments. 

Accounting Today says the court will likely pick up the matter sometime in April. 

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