ILMA Compoundings June 2018 - 35
and whether even one sale into a state
would be enough to create a tax nexus.
The Court's decision will change,
in some manner, the sales/use tax
nexus in the country. If the justices
rule in favor of South Dakota, states
will likely jump on the bandwagon,
enacting similar economic nexus
laws. Several states already have laws
similar to South Dakota's statute on
the books, expecting that these laws
will be valid if South Dakota wins.
Other states are experimenting with
marketplace taxes, leaving it up to
companies such as Amazon and Etsy
to collect and remit the sales taxes.
Keep in mind, too, that the Court
could construe its decision narrowly to
South Dakota, or it could remand the
case to the trial court.
Congress could step in after the
ruling and change the federal laws
related to sales taxes and nexus,
reversing a high court decision in favor
of South Dakota. Congress could also
give the states more authority, making
it easier for them to collect taxes on
e-commerce sales.
If the justices rule in favor of Wayfair,
Wyoming, Indiana and Tennessee
have court cases already in the pipeline
challenging Quill, and they would make
every effort to distinguish their arguments from those of South Dakota.
No matter how the Supreme Court
decides Wayfair, online sellers, including
ILMA members with internet, catalog
or phone sales across state lines, will
still have to consider future sales tax
collection requirements. The questions
then become "How soon?" and "What
is the best way to do so?" There are some
12,000 sales tax jurisdictions in the U.S.,
all with different rates and reporting
requirements. Does it make sense to
pay an accounting firm $30,000 for
tax compliance, not including possible
future audit costs and penalties, on
$60,000 in internet sales?
Clearly, compliance technology will be
important, if not a must, for online sellers
going forward. However, software alone
will not solve the problem for online sellers.
As an attorney, Wayfair is a fascinating
case, in part, because of its constitutional
law issues and because it challenges the
current legal status quo regarding online
sellers' obligations to collect state sales
taxes. From an ILMA member's perspective, the case has practical and significant
economic consequences. On balance,
ILMA members' interests get my nod.
Leiter serves as general counsel
to ILMA, representing the
Association since 1981. He may
be reached at 202-466-6502
or jleiter@bmalaw.net.
35
ILMA Compoundings June 2018
Table of Contents for the Digital Edition of ILMA Compoundings June 2018
ILMA Compoundings June 2018 - Cover1
ILMA Compoundings June 2018 - Cover2
ILMA Compoundings June 2018 - 1
ILMA Compoundings June 2018 - 2
ILMA Compoundings June 2018 - 3
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