What’s At Stake In The E-Commerce Sales Tax Debate

Back in 1992, retail was booming with new concepts and products. It was a time of great innovation with the rise of category killers, strip malls and supercenters — the internet and e-commerce was barely a glimmer in the horizon. But the first crack in a fissure that would later deeply divide the industry was forming — with brick-and-mortar retailers and U.S. states on one side, and e-commerce and marketplace companies on the other. In 1992, The Supreme Court of The United States set a crucial precedent by upholding Quill Corp. v. North Dakota — a decision that to this day only requires companies to collect and remit sales tax in states where they have a physical presence — like stores, warehouses or fulfillment centers. But then 1995 happened and Netscape went public. That year also gave rise to corporate giants Google and Amazon, and life in retail as we knew it went out the window. Suddenly dot com companies were popping up left and right. Eventually, this enabling of remote merchants to conduct business in states without collecting state sales tax began taking a bigger toll on local municipalities. Today, states may be losing between $8.5-$13 billion in annual uncollected taxes, according to a report published in November by the U.S. Government Accountability Office. While many proponents of Quill argue those numbers are inflated, some parties concede that states and businesses alike need new clarity on the 25-year-old rule given the seismic effect e-commerce has had on the industry and economy as a whole. But many also argue that Quill is still relevant today. Read more at Retail Dive.