Home – Supreme Court Divided on Internet Sales Taxes

Supreme Court Divided on Internet Sales Taxes

Last week the Supreme Court began deliberating South Dakota v. Wayfair, a closely watched case concerning whether states should be allowed to tax sales to in-state customers by out-of-state businesses, such as internet retailers.


The case is a direct challenge to the court’s 1992 decision in Quill Corp. v. North Dakota, prohibiting states from collecting sales taxes from companies without a physical in-state presence. That challenge was invited by Justice Anthony Kennedy, who wrote in a 2015 concurring opinion that the “legal system should find an appropriate case for this court to re-examine Quill.”


Two other justices, Clarence Thomas and Neil Gorsuch have also expressed qualms about Quill. But by the end of oral arguments last Tuesday, it wasn’t clear if the five votes were there to overturn that ruling.


Several of the justices voiced concern about the prospect of imposing major burdens on the businesses that sell their wares via the internet. Justice Sonia Sotomayor said the South Dakota case raised “a host of questions” and “a whole new set of difficulties.” She also suggested Congress was the proper forum for resolving the issue.


“Is there anything we can do to give Congress a signal that it should act more affirmatively in this area?” she asked.


Chief Justice John Roberts and Justice Elena Kagan, meanwhile, said Congress’ inaction on the issue could be seen as an indication it was satisfied with the status quo.


Roberts also pointed out that the problem was already being addressed by the marketplace.


“The bigger e-commerce companies find themselves with a physical presence in all 50 states,” he said, “so they’re already covered.” (NEW YORK TIMES, NATIONAL CONFERENCE OF STATE LEGISLATURES)