South Dakota passed a law that requires businesses to collect state sales taxes for orders shipped to the state.
But the court's nine justices quickly made clear that it would not be an easy sell. Justice Sonia Maria Sotomayor asked. "Where services are concerned, I recommend that the states leave well enough alone", he said.
The current law is based on a 1967 and 1992 Supreme Court Ruling that says if a retailer does not have a brick or mortar store in a state it does not have to pay sales tax.
Sotomayor and Breyer raised numerous concerns about what would happen if Quill were overturned, such as how much sales tax revenue states could collect and whether they could do so retroactively. In the The 1992 Quill decision, Galle writes "The Supreme Court concluded that obliging an individual retailer to comply with the rules of what were then more than 6,000 separate possible sales-tax jurisdictions (a number that has now grown into the five figures) would be so burdensome that it would be a de facto restraint on interstate trade".
Brann and Isaacson partners George Isaacson, Martin Eisenstein and Matthew Schaefer will represent online retailers in a case about whether those companies have to collect state sales tax. "So you want Congress to act against this background in which this court has made an incorrect resolution of the law".
It is rare - but not unheard of - for reviewing courts to reverse their prior decisions.
While different parties will certainly continue vying for their preferred outcome from the Supreme Court, when it comes to establishing a consistent baseline standard for how and when sales taxes should be collected, we can only hope Wayfair will bring some level of method to the madness.
"It's not that e-commerce is expanding". "A case questionable even when decided, Quill now harms states to a degree far greater than could have been anticipated earlier".
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The Trump administration, meanwhile, urged the justices to side with South Dakota. Another state might argue that the sale must be allocated to the client's legal domicile, or to the client's commercial domicile, or on some other basis.
More than 40 states just joined South Dakota in this case, arguing they lose billions each year.
Various estimates peg the amount of tax revenue that would flow to states at between $8 billion to $23 billion annually.
"The assertion is that asking an out-of-state seller to collect tax on goods shipped in-state discriminates against interstate commerce", said Justice Ruth Bader Ginsburg. Consumers who purchase items from remote sellers that did not charge sales tax are supposed to pay use tax on such items, but compliance is extremely low.
"Is there anything we can do to give Congress a signal it should act more affirmatively in this area?"
In statements, both of South Dakota's US senators also emphasized that Congress will still need to address sales tax in the digital era, regardless the Quill decision. But the bill died in the House, and Congress has not advanced similar legislation since.
The wisdom of the court setting a national policy divided the court.
But Wayfair, Overstock.com and the other online retailers who are parties to the case, said Congress should be the one to regulate any changes in how they do business and that software and technological advances are not the answer because it would be too costly.