Policies & Issues

Supreme Court Divided on Issue of Online Sales Tax

Policies & IssuesApr 18, 2018

Supreme Court Divided on Issue of Online Sales Tax

Some justices say the current structure for collecting sales tax for items bought online needs to be updated while others argue it’s an issue for the legislative branch.

2017_Supreme-Court.jpg
The U.S. Supreme Court hear arguments Tuesday on South Dakota’s petition to overturn Quill, the decision made in the era of mail-order catalogs that governs how online sales tax is collected today.

Washington--The U.S. Supreme Court heard arguments Tuesday morning in the case that could, or could not, change Quill, the decades-old decision governing collection of sales tax online.

The case, South Dakota vs. Wayfair Inc. et al, pits proponents of online sales tax collection, including states and retail organizations like Jewelers of America and the National Retail Federation, against online sellers like Jewelry Television, Etsy and eBay.

At issue is Quill vs. North Dakota, the 1992 Supreme Court ruling that prevents states from collecting sales tax from sellers with no physical presence, meaning a store, a warehouse, etc., in the state.

Heading into oral arguments, two justices who often find themselves on opposite sides of an issue—Justices Anthony Kennedy and Neil Gorsuch—had publicly expressed support for overturning Quill, a decision that Gorsuch described Tuesday as “antiquated.”

Justice Ruth Bader Ginsburg indicated during oral arguments that she agreed with Kennedy and Gorsuch, stating that those opposed to overturning Quill make the case that asking an out-of-state seller to collect tax on goods shipped in-state discriminates against interstate commerce.

“But as I see it,” she said, “why isn’t it, far from discriminating, equalizing sellers; that is, anyone who wants to sell in-state, whether an in-state shop, an out-of-state shop, everybody is treated to the same tax collection obligation. All who exploit an in-state market are subject to the in-state tax. Why isn’t that equalizing rather than discriminating?”

However, Justices Sonya Sotomayor, Samuel Alito and Elena Kagan seemed to agree that while Quill is outdated, the issues of governing sales tax collection is best left to Congress due to the complexities involved.

“From this court’s perspective, the choice is just binary. It’s you either have the Quill rule or you don’t,” Kagan said. “But Congress is capable of crafting compromises and trying to figure out how to balance the wide range of interests involved here.

“Now, the general (South Dakota Attorney General Marty Jackley, who spoke on behalf of the state in front of the court) said Congress hasn’t done that, but … Congress can decide when it wants to craft a compromise and when it doesn’t want to craft a compromise. And then Congress, if it decides it wants to craft a compromise, can craft a compromise in ways that we cannot.”

Justice Stephen Breyer mentioned that placing the administrative burdens of having to collect sales tax in every state could hinder smaller online sellers from entering the

market, thereby creating an oligopoly of a handful large players.

And Chief Justice Roberts indicated that the time to overturn Quill has come and gone.

“In terms of economic impact, I mean, the suggestion in some of the briefs is that this is a problem that has peaked in the sense that the bigger e-commerce companies find themselves with physical presence in all 50 states. So they’re already covered.”

This includes the biggest online retailer in the country, Amazon, which announced last March that it would begin collecting sales tax in all 50 states.

“And,” Roberts continued, “the workarounds that some of the states have employed are also bringing more in. If it is, in fact, a problem that is diminishing rather than expanding, why doesn’t that suggest that there are greater significance to the arguments that we should leave Quill in place?”

The issue of online sales tax collection ended up before the Supreme Court because of a law South Dakota passed in March 2016 requiring companies that make more than $100,000 in sales or have more than 200 transactions per calendar year remit sales tax whether or not they have a physical presence in South Dakota.

Three online retailers, Overstock.com Inc., Wayfair Inc. and NewEgg Inc., filed a lawsuit against the state and ultimately won, with the South Dakota Supreme Court ruling that the U.S. Supreme Court’s 1992 Quill decision, however dated, remains the controlling precedent on the issue of interstate tax collection.

South Dakota petitioned the Supreme Court to reconsider Quill in October 2017. In January, the court agreed to do so.

A complete transcript of Tuesday’s oral arguments in South Dakota vs. Wayfair Inc. et al is available on the Supreme Court’s website.

A decision in the case is expected before the court’s current term ends in late June.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

The Latest

Image of Winona Ryder and Iman from Pandora’s Be Love marketing campaign
FinancialsAug 15, 2025
In Q2 Results, Pandora Talks Tariffs, Q4 Plans

The company had a solid second quarter, with sales of non-charm jewelry outpacing sales of pieces in its core collections.

Taylor Swift Etho Maria ruby earrings The Life of a Showgirl TS12
EditorsAug 15, 2025
Piece of the Week: Etho Maria’s Showgirl-Approved Ruby Drop Earrings

Taylor Swift dons the vibrant pair in new promotional imagery for her upcoming album, “The Life of a Showgirl,” set to release in October.

Audemars Piguet Starwheel Watch
WatchesAug 15, 2025
Audemars Piguet Acquires Majority Stake in Manufacturer

Its investment in micromechanics expert Inhotec will preserve skills essential to the watchmaking industry as a whole, said the company.

rio-article photo-diamond.jpg
Brought to you by
Taking the Moment Head On: How Rio Grande Champions the Present & Future of Fine Jewelry

As a leading global jewelry supplier, Rio Grande is rapidly expanding and developing new solutions to meet the needs of jewelers worldwide.

Nicolette Bianchi
MajorsAug 15, 2025
Rio Grande Names New Marketing Director

Nicolette Bianchi joins the wholesale provider with more than 15 years of cross-industry experience in marketing and product development.

Weekly QuizAug 15, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Pippa Small Myanmar Fish Cluster
CollectionsAug 14, 2025
In Midst of ‘Sardine Girl Summer,’ Pippa Small Looks to ‘Flounder Fall’

Her new “Ocean” collection was inspired by Myanmar’s traditional articulated fish jewelry, with depictions of flounder, catfish, and more.

Casio America CEO Yusuke Suzuki
MajorsAug 14, 2025
Casio America Names New CEO

Longtime Casio executive Yusuke Suzuki is the new president and CEO of Casio’s U.S. subsidiary.

an instructor and a student in a bench jewelry classroom
Brought to you by
Investing in the Next Generation of Bench Jewelers

The Seymour & Evelyn Holtzman Bench Scholarship from Jewelers of America returns for a second year.

LA Trading Day
SourcingAug 14, 2025
West Coast Orgs to Host Trading Event, Mixer in LA

The full-day sourcing and networking event, slated for Aug. 18, will be followed by the fifth annual Mega Mixer Summer Soirée.

Cristiano Ronaldo and Stephanie Gottlieb Ring
TrendsAug 13, 2025
Cristiano Ronaldo Proposes With Gigantic Oval-Cut Diamond

Model Georgina Rodríguez received a rock of an engagement ring, with her diamond estimated to be 35 carats, experts say.

International Colored Gemstone Association logo
SourcingAug 13, 2025
ICA Names 2025 Board of Directors

The board elected 9 new directors at its recent ICA Congress in Brazil.

Whiskey Barrel Ring
TrendsAug 13, 2025
Colorado Jeweler, Whiskey Maker Collab on Ring Giveaway

Three winners will receive a custom ring from Honest Hands Ring Co. inlaid with a piece of history from Denver-based distillery Stranahan’s.

People shopping in a mall
SurveysAug 13, 2025
These Are The 25 Hottest Retailers, Says NRF

JD Sports and Wawa were among the fastest-growing retail companies in the U.S. last year.

Columbia Gem House Winza sapphires and rubies
SourcingAug 13, 2025
Columbia Gem House Launches Winza Sapphires, Rubies

The new inventory, all untreated, features vibrant hues and unique bicolor combinations.

Gemfields Faberge
SourcingAug 12, 2025
Gemfields Sells Fabergé for $50M

Acquired by a tech investor, the historic brand will continue to focus on jewelry, accessories, and timepieces.

Jacquie Aiche Thunderbird Slab Collection Campaign
CollectionsAug 12, 2025
Jacquie Aiche’s New Collection Harnesses the Energy of the Thunderbird

The “Thunderbird Slab” collection features a thunderbird motif as a symbol of power, protection, and boundless possibility.

Duvall O’Steen and Jen Cullen Williams
ColumnistsAug 12, 2025
Creative Connecting: How to Take a Better Headshot

Columnists Jen Cullen Williams and Duvall O’Steen share tips on how to elevate your professional image.

Vigil for slain Wheat Ridge, Colorado jeweler Peter Damian Arguello
CrimeAug 11, 2025
Man Convicted of First-Degree Murder in Death of Colorado Jeweler

Peter Damian Arguello, a jeweler in the Denver suburb of Wheat Ridge, was found dead inside his store in November 2023.

Lisa Bridge
IndependentsAug 11, 2025
Lisa Bridge to Depart Ben Bridge Jeweler

The retailer, owned by Berkshire Hathaway, is becoming part of the Berkshire Hathaway Jewelry Group with Helzberg.

Bethenny Frankel
Events & AwardsAug 11, 2025
Bethenny Frankel to Give Keynote at CBG’s Experience Show

The Continental Buying Group’s 2025 Tampa Experience Show is slated for Sept. 8-10.

Nora Kühner fashion design consulting trend forecast colors 2027
EditorsAug 11, 2025
The Colors Expected to Be On-Trend in a Couple Years

Associate Editor Lauren McLemore recently attended a fabrics trade show where a trend forecaster shared her predictions for summer 2027.

Brilliant Earth Jolie Mosaics engagement ring
FinancialsAug 08, 2025
Brilliant Earth’s Q2 Sales Up 3% as Engagement Ring Sales Rise

The company raised its full-year sales guidance while noting it has not yet assessed the potential impact of the latest tariff news.

Jewellers for Hope charity event
Events & AwardsAug 08, 2025
GJEPC’s Jewellers for Hope Celebrates 10 Years of Fundraising

The organization has raised more than $1.3 million for charity since its inception.

Rahaminov Diamonds Emerald-Cut Diamond Bezel Bangle
TrendsAug 08, 2025
Piece of the Week: Rahaminov Diamonds’ Bezel Bangle

The brand’s latest iteration of a bezel-set diamond bangle features clean lines and a timeless design for a new modern silhouette.

Black and white photo of Tony Bennett near a microphone
WatchesAug 07, 2025
Bulova’s New Collection Honors Tony Bennett

The first watch in the series commemorates his participation in the Civil Rights movement, marching from Selma to Montgomery in 1965.

Sapphire page in Chatham’s “Ultimate Lab-Grown Catalog”
Lab-GrownAug 07, 2025
Chatham Releases Catalog for Loose Lab-Grown Gemstones

The catalog contains a complete listing of all the loose gemstones in stock, as well as information about the properties of each stone.

Rembrandt Blue Jay, Hummingbird, Cardinal Bird Charms
TechnologyAug 07, 2025
Rembrandt Charms Debuts New Website, Bird Charms

The company added a retailer dashboard to its site and three new birds to its charm collection, the cardinal, blue jay, and hummingbird.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy