If you follow the news, you are aware of the upcoming oral arguments for the South Dakota v. Wayfair case taking place April 17th. This hearing is monumental because the Supreme Court will finally address whether states can broadly require online retailers to collect sales tax even if they lack a physical presence in the state.
What constitutes “physical presence” has been largely debated and challenged as the way business is conducted has evolved since the 1992 case of Quill Corp v. North Dakota that set the precedent.
With the oral arguments quickly approaching, here are a few things that you need to know:
- This case directly challenges the decision in Quill. The Supreme Court will need to decide if the issue of physical vs non-physical establishments extends to internet sellers.
- South Dakota passed economic nexus legislation in 2016 which requires online merchants with no physical presence in the state to collect and remit sales taxes if the retailers’ annual sales in the state exceed $100,000, or if the retailers conducts 200 or more separate transactions in the state of South Dakota over a given year. Other states have imposed similar legislation.
- If the Supreme Court agrees, states could receive the green light to require the collection of sales tax from internet sellers.
- Although the oral arguments are taking place April 17th, a ruling is not expected to be made until at least June 2018.
If you are looking for a resource to learn more about this case, and the implications of the upcoming oral arguments, make sure to listen to the podcast that was recorded with special guest, Peggi Rockefeller, Chief Tax Officer, Vertex Inc. We will make sure to keep you posted of all the latest happenings as this potential game changing tax decision unfolds over the next few months.
Please remember that CPA.com provides information for educational purposes, not specific tax or legal advice. Information included is current as of April 1, 2018 and may be impacted by Supreme Court decision in Wayfair v. South Dakota. Always consult a qualified tax or legal advisor before taking any action based on this information.
