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US Supreme Court considers $13bn e-commerce Sales Taxes


US Supreme Court considers $13bn e-commerce Sales Taxes

The US Supreme Court confirmed 12 Jan 2018 that it will review a case that could result in an extra $13 billion Sales Taxes being charged on e-commerce goods sales.

The decision to hear the South Dakota versus Wayfair case will challenge the position that e-commerce merchants selling into another US state where they do not have a presence need not charge local state Sales Tax. Instead, the consumer should declare the tax themselves - although this in reality this happens very rarely.  This position of no taxes on out-of-state merchants was established in 1992 Supreme Court mail-order ruling of the Quill Corp v North Dakota case.

The hearing will be in April. The Supreme Court’s review points towards an overturning of the ruling, bringing the US into line with the EU, and many other countries which do not consider a physical presence as required to establish a liability to charge taxes.

South Dakota had already had its stance overruled by the state’s Supreme Court – which cited Quill as precedent.  The National Retail Federation and 35 other states backed South Dakota to challenge the ruling on the basis that e-commerce had expanded so much that local retailers were losing out to tax-free sales from online, non-resident online merchants.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.