The Supreme Court is set to hear arguments Tuesday on South Dakota v. Wayfair Inc., an online sales tax case that may have major ramifications for sites like Etsy, Ebay, and the individual seller portions of Amazon (or the defendant in this case, Wayfair).
At present, states may not compel retailers to collect taxes on sales made to a state resident unless the retailer also has a physical presence in the state. South Dakota wants to change that. While major retailers like Amazon have the resources and infrastructure to collect and pay sales taxes in every state where a sale occurs — and, indeed, Amazon already does this for its own sales — small venders in these online marketplaces will not be able to keep up.
“If you run a company that makes just $60,000 a year, paying an accountant $50,000 a year to comply with 300 different tax jurisdictions’ regulations isn’t in your budget,” explains Ebay general counsel Marie Oh Huber at The Hill. If South Dakota wins, its victory could spell the end of sites like Ebay, Etsy, and the Amazon marketplace as we now know them.
“Tax and legal experts expect the court” to rule for South Dakota, The Wall Street Journal reports, “freeing states to collect levies on future cross-state transactions.” What new standard SCOTUS may set remains to be seen.
Source:: The Week – Business