Web-only Retailers Wayfair Inc., Overstock Inc., and Newegg Inc. filed a Legal Brief with the U.S. Supreme Court in the South Dakota vs. Wayfair Inc., Overstock.com Inc. and Newegg Inc. Case, which the Court will hear April 17th, and is expected to decide on in June.
South Dakota aims to drive the Court to Overturn its 1992 Ruling in Quill Corp. v. North Dakota. I took part in this Case.
The Court in that Case ruled that Quill, a Catalog Retailer, did not have to Collect Sales Tax in North Dakota where it had No Physical Presence. Online Retailers have used that decision to argue that they need not Collect Sales Tax in States where they have no Physical Locations, such as: Stores, Warehouses, Sales Offices, or Sales Representatives, allowing them to charge lower overall Prices than Local Bricks-and-Mortar Retailers that must collect Sales Tax.
In the 82 page (pdf) Brief, Wayfair, Newegg, and Overstock argue that the Court should not Overrule Quill, and doing so, “would cause direct harm to those businesses most in need of its protection,” such as small Businesses looking to Sell to a National Market over the Internet.
“Overstock has long-maintained that overruling Quill Corp v. North Dakota will have negative repercussions on the U.S. economy, including stunting the growth of internet-based commerce for all companies, from startups and family-owned businesses to larger sellers,” says Glen Nickle, Vice President and General Counsel for Overstock.com. “Our hope is that the U.S. Supreme Court continues to understand that commerce across state lines is best regulated at a federal level, where it is protected from the self-serving interests of individual states.”
The Retailers argue that 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.”
Besides Chain Retailers with a National Footprint, Web Giant Amazon does Collects Sales Tax for All States, and the District of Columbia, that have a Sales Tax. Alaska, Delaware, Oregon, Montana, and New Hampshire do not collect Sales Tax. However, half of Sales via Amazon.com are from Goods owned by Marketplace Sellers. For those Products, it is up to the Marketplace Sellers to Collect Sales Tax and many don’t, claiming Quill.
Wayfair collects Sales Tax in Five States: California, Kentucky, Massachusetts, New York, and Utah. Overstock collects Sales Tax in Five States: Connecticut, Kentucky, North Carolina, Pennsylvania, and Utah, and Newegg collects Sales Tax in Four States: California, Indiana, New Jersey, and Tennessee.
In the Brief, the Retailers argue that Tax Rate Tables and Sales Tax Software is Costly, Burdensome, and Ineffective.
During Quill, I suggested for a Management Fee of 5%, from each State's collected Sales Tax, I would Collect and Report the States Sales Tax.
There is Legislation that now in Congress, including the Online Sales Simplification Act, the No Regulation Without Representation Act, and Remote Transactions Parity Act of 2017. “Congress is the institution best-suited to resolve the competing interests in remote sales tax collection and to select the proper policy outcome,” the Retailers say.
“The current state sales tax system has become a crazy-quilt, involving thousands of different state and local sales tax jurisdictions, all with varying rates, rules and administrative requirements,” says Overstock in a Release about the Brief. The Brief notes an estimated 12,000 Tax Jurisdictions.
South Dakota filed its own brief on Feb. 26th. 41 States, Two U.S. Territories, and Washington, D.C., together filed One Brief in support of South Dakota on March 5th. In its Brief, South Dakota argues that a Retailer having a Physical Presence in the State is, “arbitrary in assessing both a seller’s connection to a State and its ability to shoulder the burdens of sales-tax collection.”
South Dakota and the supporting States and Territories say that not collecting Sales Tax from Internet Sellers harms State Treasuries and Bricks-and-Mortar Retailers. 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.
Internet Retailer 2017 Top 500
Amazon - No. 1
Wayfair - No. 16
Newegg - No. 21
Overstock - No. 30
NYC Wins When Everyone Can Vote! Michael H. Drucker
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