In a major victory for sales tax fairness, the Supreme Court ruled in favor of South Dakota in a case that will redefine the legal obligation of online retailers regarding sales tax collection, South Dakota v. Wayfair, Overstock, and Newegg. The ruling is an important step in leveling the playing field for bricks-and-mortar stores competing against online retailers.
“Today’s ruling represents a tremendous victory for independent booksellers and for indie retailers throughout the country,” said Oren Teicher, ABA CEO. “There is simply no way to overstate the importance of the decision handed down by the U.S. Supreme Court. This victory is a testament to the hard work and perseverance of independent booksellers, who began advocating on behalf of sales tax fairness almost two decades ago. Their tireless efforts played a pivotal role in this win for small businesses and e-fairness.” Teicher said ABA will be reviewing the ruling and will provide booksellers with more information in the weeks ahead.
The case reevaluated the Supreme Court’s 1992 Quill v. North Dakota decision, which prevented states from requiring retailers without nexus, that is, a physical presence in that state -- such as a store, office, warehouse, or sales agent -- to collect and remit sales tax to the state.
South Dakota’s petition to the Court stems from a state law passed in 2016 aimed at challenging the Quill decision, which was issued before the explosive growth of e-commerce. This law stated that retailers that transact $100,000 in sales or 200 separate transactions in South Dakota have economic nexus in the state, and therefore are required to collect and remit sales tax. When the U.S. Supreme Court announced its decision to review the case in January, ABA filed an amicus brief in support of South Dakota’s petition and sales tax fairness.
Next week's issue of Bookselling This Week will feature more coverage of this decision and its effect on booksellers.