Reflections on the Supreme Court's South Dakota v. Wayfair Inc. Decision

The implications of last week’s 5-4 Supreme Court decision, overturning the 1992 decision that determined that online retailers did not need to collect sales tax in states where they have no physical presence, are not as clear as one might think.

Certainly, the rules put in place by that 25 year-old decision need updating given the competitive advantage that was created for ecommerce. But the rationale that the decision would rein in the likes of Amazon and other ecommerce giants is misplaced. Most large ecommerce retailers already collect state sales taxes. 

Small ecommerce retailers, including those who also have brick and mortar outlets, will be most impacted. The decision does nothing to establish uniform internet sales tax rules that are essential for mom-and-pop online retailers to determine what their sales tax collection and disbursement obligations are.

Until Congress acts to establish a set of rules, the Supreme Court decision will simply make life more complicated for small ecommerce retailers without providing any true relief for the Main Street brick and mortar retailer