eBay have submitted a Supreme Court Amicus Brief urging the Court to consider the consequences of taxing independent small businesses in states where they do not have facilities, employees or a voice in the local political process. South Dakota have requested that the Supreme Court overrule its prior decision in Quill Corp. v. North Dakota which says that a state can only demand that retailers collect sales tax in the states where they have a physical presence.
An Amicus Brief is a representation to the courts by a party not involved in the litigation but with a strong interest in the case, which in this instance is South Dakota v Wayfair, Overstock and Newegg.
eBay state that if Quill is overturned then hundreds of thousands of small businesses would be at threat as they simply don’t have the resources to correctly calculate and collect tax in the thousands of different tax regiemes across the US.
South Dakota have suggested that some free software would do the trick but eBay point out that the software itself is not only incorrectly calculating tax, but that between the filing date of South Dakota’s brief on 26th of February 2018, and eBay filing the brief in April, at least 44 of the 1,785 taxing localities in California changed their sales tax rates, requiring vendors to update the rates they previously used.
The collection of tax and possible errors through the many complexities of state and city taxes means that small businesses could be sued by consumers if they inadvertently overcharge on tax and equally sued by the States if they undercharge tax. The US is a particularly litigious country compared to the UK so this is a very real concern.
Quill was established 25 years ago and ruled that small businesses couldn’t be taxed in States where they don’t have a physical presence, employees or a voice in the political process. eBay point out that small businesses have flourished under the protection of Quill and if overturned by South Dakota would have major ramifications, not only for the small businesses impacted but also for the US economy as a whole.
You can read the full Amicus Brief on eBay Inc.