Do you run a business online? The internet is a convenient place to distribute your goods and services, building a healthy customer base for business. Depending on what state you live in, you may not need to calculate taxes on some of those online orders. However, a case being examined by the Supreme Court of the U.S. (SCOTUS) could change that.
How Could a SCOTUS Ruling Ruin Your Online Business?
The State of South Dakota is suing online retailer Wayfair for not collecting and remitting taxes to the state. The online retailer claims that due to a 1992 Supreme Court ruling—Quill Corp. v. North Dakota—it doesn’t have to remit state sales taxes.
Since the Quill Corp. v. North Dakota ruling is over 25 years old, South Dakota says that ruling does not apply. The state claims that technological and economic improvements make the old SCOTUS decision out-of-date. This conflict has landed this case before the Supreme Court, and the court’s ruling could have serious implications for internet businesses nationwide.
If the ruling is in favor of South Dakota, then courts all over the country could be flooded with qui tam lawsuits. When a company breaks a federal law, qui tam lawsuits allow private parties to file grievances for the government in exchange for a share of the verdict. Such lawsuits could be made against any domestic internet company or small business that miscalculates taxes.
Such a decision could not only hurt the economy, it could also keep small business owners from growing online. This issue is so important that even online giant eBay has filed friend-of-court papers advising SCOTUS judges against ruling for South Dakota.
The implications of this SCOTUS decision are staggering, and that’s why our business litigation attorney is monitoring the situation. Follow the Law Offices of Andrew Ritholz through our blog to learn more about this ruling.