Online shopping may soon be a little more expensive. The US Supreme Court today overruled a 1992 decision, called Quill v. Heitkamp, that effectively barred states from requiring online retailers to collect sales tax when there was no physical business presence in the state.
Quill was a catalog (not e-commerce) retailer that had no presence in North Dakota. The Quill court ruled that catalog retailer didn’t have to collect sales tax from North Dakota residents accordingly. But that decision, which helped support the growth of e-commerce, wasn’t about e-commerce itself.
Quill is a precedent that traditional retailers have sought to overturn for 20 years — because they believe it gives e-commerce sellers an unfair price advantage. Accordingly the National Retail Federation, which substantially represents traditional retailers, celebrated the decision and called on Congress to pass uniform sales tax rules for omnichannel merchants.
In the interim, many states tried in various ways to get around Quill to collect sales taxes, with some success. USA Today points out that most of the 20 e-commerce sellers already collect sales taxes in many states because they have warehouses or local showrooms or because state laws can successfully reach them.
Justice Anthony Kennedy wrote the majority opinion, which was partly based on the economic realities of retailing today. The court also said that no-sales-tax rules were hurting state revenues and that the “no physical presence” rule was not working in today’s climate.
The decision opens the door for sales to pass new legislation and begin collecting more sales taxes from online sellers. Critics of the decision said it would hurt small businesses. As new legislation is proposed there are likely to be further legal battles ahead.
For more background on past legislative and lobbying efforts to address sales tax on online purchases, see Online Sales Tax: Why E-Commerce Companies Are On Both Sides Of The Debate from our archives.
About The Author
Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.
This marketing news is not the copyright of Scott.Services – please click here to see the original source of this article. Author: Greg Sterling
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