June 21, 2018
Overstock.com Inc. is calling on Congress to pass legislation to simplify, or clarify, online sales tax collection in the wake of Thursday’s U.S. Supreme Court decision that enables states and local governments to force online retailers to collect sales taxes, even if they don’t have a physical presence, or nexus, in the state.
“The U.S. Supreme Court has reshaped the interstate commerce landscape in a move that could impact small business innovation on the internet, which has been a driving force behind our nation’s economy for the last 15 years,” says Jonathan Johnson, an executive and board member at Overstock, No. 32 in the newly released Internet Retailer 2018 Top 1000, “The framers of the Constitution intended Congress to regulate interstate commerce by thoughtful legislation. To lessen the potential impact of today’s ruling on internet innovation, Congress can, and should, pass sound legislation allowing states to accomplish their aims while still permitting small internet business to thrive.”
Wayfair Inc., No. 16, which was named in the suit before the court, agreed in a statement that “the court was not the ideal venue for creating this level playing field,” before noting that it expects the decision will bring “clarity and certainty to this issue.”
Several key legislators, House Judiciary Committee Chairman Bob Goodlatte (R-Va.), Rep. Anna G. Eshoo (D-Calif.), a senior member of the House Energy and Commerce Committee, and Rep. Jim Sensenbrenner (R-Wis.), a senior member of the House Judiciary Committee, issued a joint statement that calls the court’s reversal of the 1992 Quill Corp. v. North Dakota decision a “nightmare for American businesses and small online sellers, who will now have to comply with the different tax rates and rules of, and be subject to audits by, over 10,000 taxing jurisdictions across the U.S. in which they have no say at the ballot box or representation in state and local government.”
They suggest the decision will have broad ramifications that Congress, rather than the court, is best equipped to deal with. However, spokesmen for the congressmen and congresswomen could not be immediately reached for comment on the likelihood that online sales tax legislation will pass.
While there are thousands of state and local taxing districts, David Campbell, CEO of Tax Cloud, which offers merchants free software that enables them to comply with state and local taxation laws (it is paid by 24 states that offer the software), says Overstock and the congressmen and congresswomen are overstating the issue.
“It sounds daunting to comply with all the more than 10,000 taxing jurisdictions, but it really isn’t,” he says. “It may have been difficult to comply with all of those jurisdictions in 1967 [ed: when the Supreme Court ruled in National Bellas Hess v. Department of Revenue of Illinois that a mail-order reseller was not required to collect sales tax unless it had a physical contact with the state], but that’s no longer the case. Computers are really good at keeping track of lot of information. To suggest that any company that can figure out how to sell online can’t handle taxation is silly.”