Overstock to collect sales tax following SCOTUS decision

Dive Brief:

Online home goods and furniture retailer Overstock on Monday announced it has started the process to collect sales tax on purchases made by customers in the more than 12,000 U.S. tax jurisdictions following the Supreme Court ruling last week that stripped away precedents to South Dakota v. Wayfair that previously did not require Overstock to collect and remit taxes in states where it did not have a physical presence.
The company is continuing to urge Congress to step in with legislation that takes into account "the best interests of both consumers and entrepreneurs," according to a company press release emailed to Retail Dive.
The e-tailer also announced it will expand physical and digital operations, including in supply chain, marketing and recruiting efforts, to states where the company previously had tax nexus concerns that held it back from having a direct presence there, according to the release.

Dive Insight:

Last week's landmark Supreme Court decision to overturn two long-standing precedents (Quill Corp. v. North Dakota and National Bellas Hess Inc. v. Department of Revenue of Ill.) in the e-commerce state sales tax debate has cleared the way for states to require e-tailers to collect and remit state sales tax. Previously those cases upheld laws which only required retailers with a physical presence in a state to collect such taxes.

South Dakota's court system still has to uphold the law before e-commerce companies will have to begin collecting the taxes. But unless the court finds another reason why the 2016 law should be held invalid, which it previously did not, the law is likely to be upheld. If upheld, South Dakota's law will implement an economic standard that in South Dakota would require state sales tax collection and remittance only if an online seller does more than $100,000 worth of business, or processes more than 200 transactions in the state.

Many other states are likely to follow South Dakota's model, although small business thresholds among other elements of the law will vary. For e-commerce companies and interest groups still fighting sales tax collection laws that means the fight will carry on state by state.

But Overstock has already taken the leap voluntarily to begin collecting and remitting sales tax, which suggests it's moving on. In a separate company press release immediately following the high court's decision on Thursday, the company said its business would not be significantly affected by the ruling and that it would comply. Wayfair echoed that sentiment in a press release of its own. But many still fear small businesses and third-party sellers on marketplaces like eBay, Etsy and Amazon will be harmed by the costs associated with tax collection.

Overstock.com executive and board member Jonathan Johnson expressed concern for small businesses in a statement Thursday. "Unless Congress responds, the Court’s ruling may remove key entrepreneurial opportunities before they even get out of the heads of the inventors," he said.