On January 12th, the Supreme Court decided to hear the case Dakota vs. Wayfair Inc., revisiting a decades long dispute regarding online sales tax.
The first mention of the topic on the courtroom floor was in 1992 with Quill Corp. v. North Dakota. The decision at the time denied states the ability to collect sales tax from retail purchases through the Internet or other E-Commerce avenues. The only exception was if the seller had in fact a physical presence in the state.
This decision greatly affected the emergence of online shopping as a power player in today’s society, giving online retailers an economic advantage and appeal to consumers. As brick-and-mortar begins to crumble and retailers like Amazon take the center stage, further analysis of the online market is taking place. The debate has been questioned for years and now with the turn of retail away from the physical stores, it is more important than ever. As an opportunity for brick-and-mortar to stay afloat and gain a win in the ever-evolving retail industry, this case could have a big impact.
Bringing back the argument for another look, the state of South Dakota challenged the U.S. Supreme Court to reconsider its decision. Although South Dakota has worked to standardize their sales tax rules, not all states can say the same. That’s where this case gets tricky. If other states decide to follow suit with more complicated sales tax systems, it could cause disorder and desire more involvement from the Supreme Court.
The result of this case is too soon to say as it offers costs and benefits to all parties involved. Whether the benefits overweigh the possibility of retail chaos, the U.S. Supreme Court will decide. Next time you’re checking out Online, don't be quick to dismiss the numbers next to the word “Tax”. Dakota vs. Wayfair Inc. is one to watch.
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