10 Questions: Quill Physical Presence Standard Overturned - South Dakota v. Wayfair, Inc. Webinar
In June 2018, the U.S. Supreme Court handed down a decision in the case of South Dakota v. Wayfair, Inc. In that decision, the court overruled the long-standing “physical presence” standard as a basis for imposing state sales tax that had been previously established in the historical case of Quill Corp. v. North Dakota. In Quill, the court had prohibited states from requiring online retailers (and other out-of-state businesses) to collect and remit sales tax if there was no physical presence in the form of brick-and-mortar buildings or employees within a state’s borders. Wayfair changes this.
Wayfair begs several questions and answers. Shortly after the decision, CohnReznick conducted a webinar where listeners weighed in on several Wayfair-related issues and questions. Below are some of the questions along with detailed answers.
A. An example of a facilitator is eBay. A marketplace facilitator generally engages in the following types of activities:
- Facilitates the sale of a seller’s product through a marketplace for payment (and does not take possession of or title to the property or service sold).
- Engages, directly or indirectly, in any of the following with respect to bringing the buyer and seller together.
- Transmitting or otherwise communicating the offer or acceptance between the buyer and seller;
- Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and sellers together; and
- Providing a virtual currency that buyers can use to purchase products from the seller.
Marketplace sellers affected by Wayfair are different from facilitators. A good example would be a business directly engaged in software development, or research and development processes related to any activities with respect to the seller’s products listed below:
- Payment processing services; fulfillment or storage services
- Listing products for sale
- Setting prices
- Branding sales as those of the marketplace facilitator
- Order taking
- Advertising or promotion; providing customer service or accepting or assisting with returns or exchanges
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.