Supreme Court Agrees to Hear Online Sales Tax Case

Washington--The U.S. Supreme Court has agreed to take up a petition to reconsider Quill, the 1992 ruling that governs how taxes from online sales are collected today.

The justices announced their decision to take up the case of internet sales tax on Friday, the SCOTUS blog shows.

Officially filed as South Dakota v. Wayfair Inc., the case for internet sales tax “fairness,” as it is known among proponents, made its way to the highest court in the land via South Dakota.

In 2016, legislators in the Midwestern state passed a law requiring companies that make more than $100,000 in sales or have more than 200 transactions per calendar year remit sales tax, whether they have a physical presence in South Dakota or not.

Legislators argued the state is missing out on millions in revenue from online sales and that it’s time to revisit Quill, the nearly-26-year-old decision that prohibits states from imposing sales tax requirements on vendors with no physical presence there.

Online retailers NewEgg, Wayfair and Overstock.com challenged the law in the state’s Supreme Court and won, with the court stating in its decision, “However persuasive the state’s arguments on the merits of revisiting the issue, Quill has not been overruled. Quill remains the controlling precedent on the issue of Commerce Clause limitations on interstate collection of sales and use taxes.”

In October, South Dakota Attorney General Marty J. Jackley petitioned the U.S. Supreme Court to take up the case, which it agreed to Friday.

The court is expected to hear oral arguments in April, with a decision expected by late June.

The lack of sales tax collection on online purchases is an important issue for brick-and-mortar retailers, particularly those who depend on high-dollar sales like jewelers.

Jewelers of America has been fighting on behalf of its members for changes to the legislation governing online sales tax collection for a decade and was one of 10 retail trade associations that filed an amicus brief with the Supreme Court in support of South Dakota’s petition.

JA President and CEO David J. Bonaparte called Friday’s decision a “major milestone” in the association’s long-standing fight to “level the playing field” between online and brick-and-mortar retailers.

“Now that the court has agreed to hear the case, we are optimistic that it will recognize that Quill does not reflect the retail landscape that exists today,” he said.

But Overstock.com, the only retailer of the three involved in the case that sells jewelry, sees it differently.