The Supreme Court recently granted certiorari in South Dakota v. Wayfair Inc., a case that could dramatically change how sales taxes apply to online retail activity. Under the Supreme Court’s current precedent in Quill Corp. v. North Dakota, online retailers need not collect sales taxes unless they have a physical presence in a state. But Quill was decided in 1992, when most remote sales were via phone or mail order. If the Supreme Court overturns Quill, online retailers may face significant new tax liabilities in numerous jurisdictions. States, on the other hand, see Wayfair as an opportunity to significantly increase their tax revenues. It is estimated that state and local governments could have collected around $13 billion more in 2017 had they been allowed to require online retailers to collect sales taxes, even with no physical presence. South Dakota made it clear that the law at issue in Wayfair is designed to test the Quill standard.
The Supreme Court will hear oral arguments this spring. Stay tuned for updates as the parties submit their briefs.