COMMEMORATING THE SECOND ANNIVERSARY OF THE WAYFAIR DECISION

Two years ago this week the U.S. Supreme Court ruled in favor of the states in the landmark case, “South Dakota Department of Revenue versus Wayfair, Inc.” The case, originally brought by South Dakota and signed onto by other states with sales taxes, sought permission from the Court to require outside businesses to collect a state’s sales and use taxes from its customers for items purchased through the internet and other remote platforms.  In ruling for the states, the Supreme Court overturned an existing law requiring a physical presence within the state before the burden of collecting sales taxes could be imposed on a seller.

In marking the second anniversary of the decision, North Dakota State Tax Commissioner Ryan Rauschenberger said, “This was indeed a landmark decision for North Dakota and all states that use sales taxes as a vital source of state funding. The decision leveled the playing field for local sellers who were no longer at a competitive disadvantage with their online competitors due to a sales tax requirement.”

In addition to the fairness aspect, Rauschenberger noted the decision has resulted in significant state and local revenue.  “To-date, the state of North Dakota has collected slightly over $43 million in sales and use taxes from remote sellers delivering products into the state. North Dakota cities and counties that impose local sales taxes have received nearly $15 million through the first half of 2020.”

Eighteen months after the Wayfair decision became law, the U.S. is grappling with a worldwide pandemic that has resulted in temporary business closures and economic disruptions.  “As the nation fights COVID-19, customers have turned to the internet to purchase household essentials including food, clothing, pharmaceuticals and more. In the most recent month alone, state sales taxes from remote sellers grew by more than 500 percent to $2.9 million, up from $475,000 just one year ago. Because of the Wayfair decision, states and localities can continue to collect sales taxes on those purchases providing a bit of stability in these difficult times,” Rauschenberger concluded.

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