The U.S. Supreme Court ruled yesterday that states can require retailers to collect sales tax on purchases made by in-state residents, regardless of whether the retailer has a physical presence in the state. The ruling overturned a 1992 decision in Quill v. North Dakota, which required a physical presence in a state before a retailer was required to collect sales taxes from purchasers in that state.
At issue in the Wayfair case was whether South Dakota could enforce its law on remote sellers that sold more than $100,000 in taxable sales or had 200 separate transactions in a year. The Wayfair case is expected to bring sweeping changes to the business community, especially internet-based businesses.
In Tennessee, officials estimate that the state loses out on hundreds of millions of dollars in sales tax revenue a year. Both Senators Lamar Alexander and Bob Corker welcomed the news.
“The Court’s decision is good news for Main Street business and for states,” Alexander said in a statement posted to his website. “It correctly leaves to states decisions about who should pay state sales and use taxes and how they should be collected. There still may be a need for Congress to adopt the simplified collection of sales tax procedures in the Marketplace Fairness Act that 69 United States senators voted for in 2013.”
Additional litigation could be ahead, according to analysts. We’ll monitor this matter and keep you apprised as more information becomes available.