The web-only retailers filed a brief with the U.S. Supreme Court for the upcoming South Dakota v. Wayfair case urging the court to uphold a 1992 ruling that retailers do not need to collect sales taxes in states where they have no physical locations.

Web-only retailers Wayfair Inc., Overstock Inc. and Newegg Inc. filed a legal brief with the U.S. Supreme Court in the South Dakota vs. Wayfair Inc., Inc. and Newegg Inc. case, which the court will hear April 17, and is expected to decide on in June.

South Dakota aims to drive the court to overturn its 1992 ruling in Quill Corp. v. North Dakota. The court in that case ruled that Quill, a catalog retailer, did not have to collect sales tax in North Dakota where it had no physical presence. Online retailers have used that decision to argue that they need not collect sales tax in states where they have no physical locations, such as stores or warehouses, allowing them to charge lower overall prices than bricks-and-mortar retailers that must collect sales tax.

In the brief (read the full brief here), Wayfair, Newegg and Overstock argue that the court should not overrule Quill, and doing so, “would cause direct harm to those businesses most in need of its protection,” such as small businesses looking to sell to a national market over the internet.

“Overstock has long-maintained that overruling Quill Corp v. North Dakota will have negative repercussions on the U.S. economy, including stunting the growth of internet-based commerce for all companies, from startups and family-owned businesses to larger sellers,” says Glen Nickle, vice president and general counsel for “Our hope is that the U.S. Supreme Court continues to understand that commerce across state lines is best regulated at a federal level, where it is protected from the self-serving interests of individual states.”

The retailers argue that sales tax collection at the state level, “would prove particularly burdensome for smaller and medium-sized retailers that lack internal systems for multi-state tax compliance. Many of the largest internet retailers, meanwhile, already collect the tax at rates approaching traditional bricks-and-mortar sellers.”


Besides chain retailers with a national footprint, web giant Inc. collects sales tax for all states (and the District of Columbia) that have a sales tax. Alaska, Delaware, Oregon, Montana and New Hampshire do not collect sales tax. However, half of sales via are from goods owned by marketplace sellers. For those products, it is up to the marketplace sellers to collect sales tax and many don’t.

According to Internet Retailer’s data, Wayfair collects sales tax in five states (California, Kentucky, Massachusetts, New York and Utah), Overstock collects sales tax in five states (Connecticut, Kentucky, North Carolina, Pennsylvania and Utah) and Newegg collects sales tax in four states (California, Indiana, New Jersey and Tennessee).

In the brief, the retailers argue that tax rate tables and sales tax software is costly, burdensome and ineffective.

They advocate for a simpler and uniform sales tax solution, such as other legislation that is now in Congress, including the Online Sales Simplification Act, the No Regulation Without Representation Act and Remote Transactions Parity Act of 2017.

“Congress is the institution best-suited to resolve the competing interests in remote sales tax collection and to select the proper policy outcome,” the retailers say.

“The current state sales tax system has become a crazy-quilt, involving thousands of different state and local sales tax jurisdictions, all with varying rates, rules and administrative requirements,” says Overstock in a release about the brief. The brief notes an estimated 12,000 tax jurisdictions.

South Dakota filed its own brief on Feb. 26. What’s more, 41 states, two U.S. territories and Washington, D.C., together filed one brief  in support of South Dakota on March 5. In its brief, South Dakota argues that a retailer having a physical presence in the state is, “arbitrary in assessing both a seller’s connection to a State and its ability to shoulder the burdens of sales-tax collection.”


South Dakota and the supporting states and territories say that not collecting sales tax from internet sellers harms state treasuries and bricks-and-mortar retailers. State and local governments could have collected up to $13 billion more in 2017 if they’d been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congress’s non-partisan audit and research agency. Other estimates are even higher.

Wayfair declined to comment, and Newegg did not immediately respond to a request to comment.

Wayfair is No. 16 in the Internet Retailer 2017 Top 500, Amazon No. 1, Newegg No. 21 and Inc. No. 30.