The Supreme Court’s Pen Strikes Down Quill-Now What???

On June 21, 2018, in South Dakota v. Wayfair, Inc., the U.S. Supreme Court struck down over fifty years of precedent when it ruled that retailers are no longer required to have a physical presence in a state to be subject to the state’s tax jurisdiction for sales tax purposes. Importantly, the question before the Court was never whether South Dakota has the authority to tax the sales of goods and services delivered to consumers within its borders, as there is no doubt that such transactions are subject to South Dakota sales and use tax. Rather, the question was: who bears the tax compliance responsibility – the retailer or the consumer?

Sales and use taxes can often be thought of as two sides to the same coin. If a transaction is subject to sales tax, generally, the retailer must collect the tax from the consumer then report the sale and remit the tax to the appropriate taxing authorities. If a retailer is not subject to the tax jurisdiction of the state (or local authority) to which the tax is owed, the consumer is required to remit the tax (as a use tax) and report their purchase to the appropriate taxing authority. The question before the Court in Wayfair was: when may a state exercise tax jurisdiction over a retailer and require such retailer to collect, remit and report sales tax to the state?1

Continue reading
  932 Hits
932 Hits