Confused about the impacts of the Supreme Court’s Wayfair decision? That’s ok: the Tax Foundation has you covered.
Their helpful Q&A answers questions like, “I thought states were prohibited by law from taxing the internet?” (they are – they are prohibited from taxing access to the internet, not sales of things over the internet), and “Is my state going to receive a ton of revenue?” (Probably not; but, there will be some. The Government Accountability Office (GAO) estimates uncollected e-commerce revenue nationwide to be about $8-$13 billion.)
What will the landscape look like in one to two years because of this decision, versus 10 years from now?
If states simplify their tax systems as set out by Wayfair, there will likely be only small changes in the e-commerce landscape. Sellers may need to monitor their new compliance requirements and seek a new software solution, but these costs can be minimized if states provide the necessary simplifications and protections. However, if some states ignore the features of the South Dakota law in crafting their own laws, and put crushing burdens on interstate sellers, there will be more litigation and a higher potential for action by Congress.
The Tax Foundation will be working with states to include seller protections in their laws and will help challenge laws that ignore the Wayfair rules, and educating policymakers on the value of congressional action to codify seller protections in federal law.
In short, the Tax Foundation advises state legislators to craft their own states’ e-commerce sales tax laws closely like South Dakota’s – or risk legal scrutiny and federal preemption.