South Dakota v. Wayfair (Decided June 21, 2018)
Supreme Court grants a field day for state tax policymakers.
States have been trying to get a piece of the $28 billion online retail industry for years. And today, the Supreme Court gave them a major win.
Before today, states were prohibited from collecting tax on many online sales. As long the seller did not have a "physical presence" in the state, the transaction couldn't be taxed. Even when the company delivered massive amounts of goods to consumers in the state.
The "physical presence rule" came out of a 1992 Supreme Court case, Quill v. North Dakota. Quill had interpreted the Constitutional limits of state taxation. At the time, physical presence was a sensible limit to the Justices. But 1992 was a different day than today.
In recognizing the changed nature of commerce since the Internet Revolution, the Supreme Court overruled Quill.
The court said "extensive virtual presence" is sufficient to satisfy the Constitutional requirements.
What happens now?
States likely will begin collecting taxes on many more online transactions - especially those large businesses with "extensive virtual presences." South Dakota's opponents in the case (Wayfair, Overstock and Newegg), for example, will be among them. Of course, that means the company passes the taxes on by charging it to customers.
However, some major online retailers are already paying sales taxes around the nation. Amazon, for example, fought states for years on this issue and finally threw in the towel. Walmart and Target also comply with sales tax requirements for their online orders because they each have a "physical presence" in every state (in case you didn't notice).
On the other side, however, is a major benefit to states. Being able to tap into increased tax revenue, states will gain a significant amount of money to spend on general budget items like public schools, administrative departments and social programs.
The Court's opinion is here.
View recent reports:
Can the government ask people about citizenship on the Census?
When can a party appeal a judicial decision in the middle of a case?
Can the company be liable if it shipped parts that later received asbestos insulation?
Does the Louisiana law place a “substantial obstacle” on the right to an abortion?
Can Knick bring her claim in federal court before going through state litigation first?
Do the defendants’ prior convictions count as burglary under the federal law?
Is the death row inmate “insane” meaning he cannot be executed?
The Supreme Court will decide between frog and business interests in this case challenging federal agency action.
An infographic history of the Supreme Court nominee.
Infographic | History of labor union power and employment rights in the United States.
Infographic explaining the basic stages of federal civil litigation.
The NRA sued New York and Governor Cuomo. This infographic explains each side’s First Amendment argument.
Infographic analyzing all Supreme Court cases of the 2017-2018 term by legal subject area and containing links to infographics explaining each decision.
Supreme Court nominee Brett Kavanaugh has expressed views in line with Scalia’s on the EPA’s ability to regulate on climate change. With Kennedy out, see how the Court’s positions could change.
Learn about administrative agency power and how conservative and liberal viewpoints on regulation relate to it.