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Anybody’s Guess What Supreme Court Does With Online Sales Tax Case

2018-04-27T12:45:18+00:00April 27th, 2018|

Last week, the U.S. Supreme Court heard oral arguments in the case of South Dakota v. Wayfair Inc. The Court is grappling with the issue of whether states should be allowed to require online retailers to collect sales tax from customers in states where the online seller has no physical presence, no legal nexus. The Court’s precedent would say no – that puts an undue burden on interstate commerce.

But the fact that the Court agreed to take the case generated optimism among proponents that the Court may be ready to overturn what some call outdated case law. Going into the hearing many anticipated a tenor toward overturning the pre-internet Quill Corp. v. North Dakota decision involving catalog sales. But just a couple minutes into the hearing, it became evident that there is considerable reservation among some members of the Court as to whether Quill should be overturned.

Several justices expressed hesitation related to delving into what is largely a policy issue that Congress has the authority to address, has in fact considered and has, for whatever reasons, not acted. Justices also noted that the case involves many practical, non-legal complexities – matters that would best be sorted out by Congress. Some spectators later commented that the hearing seemed more like a legislative debate than a legal argument. Expert observers have suggested that the Court could go several different directions, and many are now questioning the likelihood of it overturning of the Quill decision.

Whether they overturn or uphold the decision, there is a very definite possibility that the case generates a variety of differing opinions, with no single opinion representing a majority of the justices. It is even possible that they refrain from overturning Quill but find that the South Dakota statute doesn’t actually violate Quill. The only agreement amongst the prognosticators is that just about anything could happen. And, whatever the Court decides before their term ends on June 30, it will probably not put the issue to rest. Rather, it may prompt Congress to act. It may prompt states to pass legislation. And it may set the groundwork for yet another Supreme Court case down the road. Or, all of the above. The issue will live on.

Audio aligned with the transcript of oral arguments in this case is available here.

Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com