TaxConnections

 
 

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please enter your input in search


Wayfair Files Online Sales Tax Legal Brief: What You Need To Know



If you’ve been following the online sales tax debate with us, you know the Wayfair v. South Dakota case is going before the U.S. Supreme Court shortly; oral arguments are scheduled for next week (April 17).

In the meantime, Wayfair has filed a legal brief along with two other online retailers: Overstock Inc. and Newegg Inc. Keep reading for a brief summary of their argument for maintaining the Quill ruling from 1992.

Wayfair’s Brief Against Online Sales Tax

While South Dakota is hoping the Supreme Court overturns Quill so that it can collect sales tax from online retailers, major online companies across the country argue it would hurt business nationwide.

As the legal brief filed by online retailers explains, “Sales tax collection at the state level, ‘would prove particularly burdensome for smaller and medium-sized retailers that lack internal systems for multi-state tax compliance. Many of the largest internet retailers, meanwhile, already collect the tax at rates approaching traditional bricks-and-mortar sellers.’”

While all three companies that filed the brief already collect sales tax in some states, they explain, “Tax rate tables and sales tax software is costly, burdensome and ineffective,” with approximately 12,000 tax jurisdictions across the country.

Instead, the retailers are pushing for an easier online sales tax solution that provides a more uniform way of collecting the fees. Examples include legislation like the Online Sales Simplification Act, the No Regulation Without Representation Act and Remote Transactions Parity Act of 2017. They claim it would be better for Congress to come up with a solution that is easier to enact and enforce nationwide.

South Dakota’s Brief For Online Sales Tax

While Wayfair, Overstock and Newegg filed their brief fairly recently, South Dakota already filed theirs back in February. Other jurisdictions weighed in as well, with 41 states, two territories and Washington D.C. filing one brief altogether in support of overturning Quill.

South Dakota’s brief argues that due to the internet, physical presence is now arbitrary in its gauge of a seller’s connection to the state, and that not collecting sales tax from online sales hurts both state treasuries and brick-and-mortar retailers trying to compete with online stores.

The brief notes, “State and local governments could have collected up to $13 billion more in 2017 if they’d been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congress’s non-partisan audit and research agency. Other estimates are even higher.”

With just a week before the Supreme Court hears oral arguments, and with a decision expected in June, this is certainly an interesting time for the online sales tax debate. We look forward to seeing how the story unfolds and will continue to update you with the latest news.

Have a question? Contact Monika Miles.

Your comments are always welcome!

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.