The U.S. Supreme Court has ruled that states can compel online retailers to collect sales tax. The case, South Dakota v. Wayfair (No. 17-494), overturns two previous Supreme Court decisions and represents a landmark shift in law and policy that will tremendously impact online shopping.
Here is the Renzulli Run Down of what you need to know:
- The Supreme Court’s Opinion was 5 to 4, with Justice Kennedy writing for the majority, joined by Justices Alito, Ginsburg, Gorsuch, and Thomas. The decision is noteworthy not simply because of the Court’s decision, but also because of the split between the majority and minority which did not fall along the ideological lines typically associated with the Justices.
- The Supreme Court’s Opinion overturns two long-standing Supreme Court opinions, Quill Corp. v. North Dakota (1992) and National Bellas Hess, Inc. v. Department of Revenue of Illinois (1967), which held that a state could not collect sales tax from a retailer that did not have a physical presence in that state.
- The majority was clearly concerned that the old physical presence requirement was behind the times. The Opinion is replete with references to the fact that the Internet revolutionized and altered marketplace dynamics, e.g., Justice Kennedy wrote: “The Internet’s prevalence and power have changed the dynamics of the national economy.” Nevertheless, the Opinion does not turn simply on the “Internet revolution” (to use Justice Kennedy’s phrase), the majority emphasizes that its prior decisions were just plain wrong. (“Though Quill was wrong on its own terms when it was decided in 1992, since then the Internet revolution has made its earlier error all the more egregious and harmful.”)
The Supreme Court’s Opinion is accessible here. We will continue to monitor the impact of this decision across the United States.