It’s the Supreme Court ruling that changed the landscape for online retailers. South Dakota v. Wayfair has given states more latitude to collect sales tax on out-of-state internet sales. On this episode of “Unique Perspectives – The DGC Podcast,” our guest is Scott Thomas, a Consultant at DGC. Scott will give us an in-depth look at the South Dakota v. Wayfair decision, and how this will impact the way online sales are treated by the states, the businesses and the customers.
Here is a partial transcript of Scott’s interview with host Tom Annino:
Tom Annino: Let’s start from the beginning or as close to the beginning as we can. I know this goes back quite a few years. How did we get to this point with South Dakota v. Wayfair and this ultimate decision?
Scott Thomas: Well, this starts back all the way in 1967 but I’ll take you up to 1992. In the Quill case that came before the Wayfair decision, the court came out and said we’re going to make it easy for taxpayers to know when they have to collect sales and use tax. That collection standard is when you have a physical presence in the state, meaning you’ve got people or assets in the state. The Wayfair decision changed that. What Wayfair does is it essentially got rid of that physical presence requirement and said mere economic presence of a sufficient amount would generate a collect and remit requirement for those sellers in those situations.
TA: When the decision was released, how surprised were you? Were you surprised?
ST: First, we were surprised that they even took the case because we wanted an answer as to whether the former Quill decision also applied to income tax. The case finally got to them because Supreme Court Justice Neil Gorsuch in another case said that he didn’t like the Quill decision. In essence, he thought it was a good time to review it. As a result of that, what happened is the states immediately started writing statues called “Kill Quill Statutes.” What they did is they wrote a statute intentionally violating Quill, that were, I guess, at that point in time, intentionally unconstitutional so the case would make it through the system. The first cases that went were Wayfair and, in Alabama, a case called Newegg. These cases made it through the system all the way up to the court. Once they got there, we went back and forth as to who we thought was going to win this case. Initially, we thought it would probably go 5-4 for the states because we did a little bit of counting heads of the Supreme Court as to who would ordinarily go which way in this scenario. Then we listened to the oral arguments and the court was very tough on the states in this perspective. As a result of that, we kind of flipped to 5-4 the other way. Of course, it came out the original way in favor of the states.
Now that the ruling is in, what’s next for the states, the businesses, and the customers? Click here to listen to the podcast or click on the player above.
To access our podcast archives, click here.
If you would like to get alerts and insights like this sent directly to your inbox, sign up here.