NRF Hails Supreme Court Decision to Take Up South Dakota Online Tax Case

January 16, 2018 by Paul Gluckman|E-Commerce

The National Retail Federation hailed the U.S. Supreme Court’s decision Friday to take up a South Dakota case on whether online sellers can be required to collect sales tax the same as local stores. “Antiquated sales tax collection rules have resulted in an uneven playing field that’s making it harder for Main Street retailers to compete in today’s digital economy,” said NRF President Matthew Shay. “This is a basic question about fairness, which all of our members deserve whether they’re selling in stores or online.” NRF also backs federal legislation to allow states to require out-of-state sellers to collect sales tax and to resolve details on how collection would take place rather than leaving it to each of the states to interpret how to do so, said Shay. At issue in the case, South Dakota v. Wayfair (docket 17-494), is whether the Supreme Court should repeal its 1992 decision that sales tax laws were too complicated for retailers to know how much tax to collect unless they were physically present in the customer’s state. NRF argued in a Nov. 1 amicus brief that modern computer software renders those concerns obsolete. Online merchants' groups, including the American Catalog Mailers Association, counter that the state sales tax landscape remains overly burdensome and that the states have offered no meaningful alternative to the physical-presence requirement. South Dakota has no state income tax and relies on retail taxes for much of its revenue, it argued in an Oct. 2 writ of certiorari petition. The state’s “low-density, rural population has a particularly strong incentive to take advantage of tax-free sales from internet retailers, who now quickly deliver everything from major appliances to everyday necessities throughout the country,” it said. The National Conference of State Legislatures also hailed the decision to hear the case, saying it has “long supported marketplace fairness as states are losing tens of billions of dollars per year in uncollected sales taxes.”