January 19, 2018
Authored by: Bryan Cave and Charles Lin
Retailers will be closely watching the outcome of the U.S. Supreme Court’s decision to revisit a 26-year-old case which has limited states’ taxing authority over online sales.
The Supreme Court, heeding calls from traditional retailers and dozens of states, has granted review of South Dakota v. Wayfair, Inc., in which retailers challenge the 1992 ruling in Quill Corp v. North Dakota as obsolete. Quill held – in a pre-internet era – that states cannot impose sales and use tax collection obligations on retailers without a physical presence within a state. As a result, online retailers without a physical presence in a state have developed a pricing advantage over retailers located within the state.
In the meantime, Congress is considering a number of legislative proposals addressing state taxation of online sales, including the Remote Transactions Parity Act, which would allow states to require out-of-state sellers to collect sales tax.