Earlier this year, ERA issued a press release with my reaction in response to the Supreme Court’s decision to review of its Internet Sales Tax rulings. Specifically, the court granted a petition for certiorari in South Dakota v. Wayfair, Inc., Overstock.com, Inc. and Newegg, Inc.
I didn’t think it was the right call for the Supreme Court to take up this case with all the information currently available on it.
In effect, the court has agreed to reconsider whether or not remote retailers must collect sales tax online without a physical presence or “Nexus.” By considering the case, the Court is also signaling to the marketplace that there is a real possibility of change afoot. It would not be surprising if a ruling came down later this year mandating the collection of sales tax on remote sales.
I continue to believe the correct venue to resolve this dispute is in Congress. In 2013, the Senate passed a bill that would have required online retailers to collect sales tax if they had at least $1 million in annual sales. This proposal ultimately died in the House. However, it was a missed opportunity for the states. Upon the defeat of the bill, the states and their allies in the business community decided to pursue a state legislative strategy of nuisance legislation rather than engaging in good faith negotiations mediated by Congress.
Regardless of the outcome of this upcoming Supreme Court ruling, Congress will again be forced to re-explore the vexing issues surrounding fairness, cost, and compatibility before any implantation can occur. I continue to believe a strong physical presence standard set in Quill is the best Constitutional interpretation as the rules of the road currently stand. However, we do stand ready as an industry to engage on behalf of participants with Congress to ensure any transition forced by a Supreme Court ruling is smooth and seamless. For small and midsize businesses this issue is much too important to botch. A healthy and vibrant marketplace depends on getting it right.
I will continue to update you on conditions as merited by developments in the court case. Fingers crossed that we will have a positive outcome and I will have good news to report!
About the Author
Bill McClellan serves as ERA's Vice President of Government Affairs. Prior to joining the association, Bill worked as a lobbyist at the Georgia Automobile Dealers Association, covering the state legislature and Georgia's congressional delegation. Before working for the GADA, Bill managed political campaigns at both the congressional and state constitutional levels.