The U.S. Supreme Court Rules That States May Compel Online and Mail-Order Retailers to Collect State and Local Sales Taxes

This significant ruling is not necessarily disruptive to commerce, according to TaxCloud

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WHO:  

The United States Supreme Court announced today in a 5-4 ruling on South Dakota v. Wayfair, Inc. that states may compel online and mail-order retailers without a physical presence in the state to collect state and local sales taxes on purchases made by residents.

 
David Campbell, CEO of TaxCloud, a leading provider of sales tax compliance for online retailers, is available to discuss the implications for retailers and consumers, including:

• The operational requirements for retailers to ensure tax compliance

• The shift in responsibility from consumer self-reported purchases to automatic tax collection by the retailer, upon purchase

• The likely timeline for states to provide public notice as to beginning dates when compliance is mandatory

WHAT: According to recent estimates, the annual amount of uncollected state and local taxes is over $34 billion1.
 

The decision announced today in favor of South Dakota overturns the previous 1992 Quill Corporation v. North Dakota and 1967 Bellas Hess v. Illinois rulings, which prohibited states from requiring sales tax collection by out-of-state retailers due to now-antiquated views of the complexities involved. In today’s ruling, the Supreme Court overwhelmingly recognized various technological advances throughout retail, including the rise of online retail that enables modern cash registers, order management systems, and online checkout processes to easily facilitate tax compliance. These technological advances also include unprecedented efficiencies and cost-saving opportunities for small and medium-sized enterprises.

 
In 2016, online retail accounted for 8.0% of all U.S. retail sales2. This figure is expected to increase to 12.4% by 20203.
 
At present, there are over 10,700 distinct state and local tax jurisdictions in the U.S4.
 
WHERE: TaxCloud’s Campbell is available to brief reporters on the issues by telephone as well as participate in remote broadcast segments.

About TaxCloud

TaxCloud is a service of The Federal Tax Authority, LLC (d/b/a TaxCloud), a Washington Limited Liability Company. TaxCloud was founded in 2008 by e-commerce veterans and top state tax administrators from around the country. The company has always been driven by a simple mission: offer online retailers a free and easy way to calculate and collect sales tax. Since inception, TaxCloud has been designed to ensure ease-of-use and minimal cost for retailers. TaxCloud first achieved CSP certification with the states in 2010. Today, TaxCloud is one of the largest providers of sales tax compliance services, with more than 20,000 online retailers registered. TaxCloud operates from offices in California, Connecticut, Kansas, Oklahoma, and Washington State. For more information, visit taxcloud.com.

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1 Int’l Council of Shopping Ctrs., Case for Fairness (March 2017) https://go.taxcloud.com/ncsli

2 U.S. Census Bureau, E-Stats 2016: Measuring the Electronic Economy (May 2018) https://go.taxcloud.com/2016r

3 Statista.com, E-commerce Share of Total Retail Sales in US https://go.taxcloud.com/ncsli

4 Tax Foundation Amicus Brief in South Dakota v. Wayfair (November 2017) https://go.taxcloud.com/tfjur2017

Contacts

ICR
Christine Hardman, 646-277-1286
taxcloud@icrinc.com

Contacts

ICR
Christine Hardman, 646-277-1286
taxcloud@icrinc.com