Lawyers for Newegg, Wayfair and Overstock petitioned the U.S. Supreme Court, requesting that it decline to review a South Dakota Supreme Court decision that would require larger online retailers to collect sales tax on purchases made in the state.

Online retailers are asking the U.S. Supreme Court to decline review of a case that would require larger e-retailers to collect sales tax from South Dakota residents and pay it to the state.

Lawyers for Wayfair Inc., No. 16 in the Internet Retailer 2017 Top 500, Inc. (No. 30) and Newegg Inc. (No. 21) filed a petition with the U.S. Supreme Court recently encouraging the Court not to review an earlier ruling from the South Dakota Supreme Court that prevents the state from enforcing a law that would give states more power to tax online retailers who don’t have a physical presence in those states. The state of South Dakota in October had petitioned the U.S. Supreme Court to review the decision.

The South Dakota law would require out-of-state retailers that don’t have a physical presence in the state and generate least $100,000 in online sales or more than 200 transactions in the state to collect sales tax from South Dakota customers and then remit those taxes to the state.

South Dakota’s case challenges the landmark 1992 Quill Corp. vs. North Dakota ruling, which ruled that Quill, an office supplies catalog retailer, was not required to collect or remit sales tax in North Dakota because it didn’t have a physical presence there.

House Judiciary Chairman Bob Goodlatte, R-Va., also filed a brief asking the U.S. Supreme Court not to review the case. Goodlatte, in a statement said that the decision to tax online purchases should not come from the Supreme Court.


“A single decision from the High Court would impose a one-dimensional, heavy-handed solution that short-circuits the legislative process,” he said. “Unlike the court system, Congress is much better equipped to adopt a nuanced solution that will protect all parties’ legitimate interests without burdening small business owners unfairly.” Goodlatte did not specify what alternatives Congress is considering, but he was co-sponsor of a bill called the No Regulation Without Representation Act of 2017, introduced in June, which called for strict guidelines on what constitutes a physical presence in a state. That bill in July was referred to a subcommittee on regulatory reform, and no further action has been taken.

Matthew Schaefer, a partner at law firm Brann & Isaacson which is representing Wayfair, Newegg and Overstock in this case, says it’s likely that the U.S. Supreme Court will consider whether to review the case during one of its three conference dates in January and February. However, if the Supreme Court decides not to review the case, then the case is over and the South Dakota Supreme Court ruling stands.

Meanwhile, legislators in Iowa are discussing the possibility of attempting to collect taxes on online sales in the state.

Iowa Rep. Guy Vander Linden says in an email that he wanted to start discussion in the House because Iowa is about to start its legislative session, and “tax policy will occupy a good portion of our time.”

The Republican state legislator admits, however, that it’s unlikely that taxes for online purchases will change in Iowa anytime soon.


“Any member could introduce a bill at any time,” he says. “However, I think that is unlikely and the chances of passage of such a bill is even less likely.”