Last week, the Supreme Court announced its decision to review a case during its upcoming session that could have a tremendous impact on online retailing in the U.S. Beyond that, the National Retail Federation, appears to be at odds with some retailers—specifically those named in the case—over which way it believes the court should rule.
The case hails from the South Dakota court system and pits a number of online retailers against the state, which is seeking to require those online sellers to collect the same sales tax that local stores are required to. Currently, based on a Supreme Court ruling in 1992, online retailers only have to collect state sales tax in states in which they have a physical presence—be it a store, warehouse, distribution center, etc. Online retailers named in the case include Overstock, Wayfair Inc., and Newegg Inc., the latter of which is an online-based consumer electronics retailer.
The previous Supreme Court ruling—Quill Corp v. North Dakota—established the grounds for online retailers collecting state sales tax only in jurisdictions in which they have a physical presence. At the time, the court cited state sales tax laws that were too complicated for retailers to know how much to collect unless they were physically present in the customer’s state.