Just how much June’s SCOTUS ruling on state sales tax might affect book buyers online—and off—will become clearer only over time
We agree with most observers that it’s too early to get a clear read on what the June 21 Supreme Court ruling in South Dakota v. Wayfair will mean on the ground. The gist of the decision is that a state can force online retailers to collect sales tax even if those retailers don’t have a physical presence in that state. This ruling overturned a 1992 precedent that barred the collection of such tax.
While this decision has far-reaching implications for all sectors of business—including individuals who sell through Amazon, eBay, and Etsy—you’ll find varying opinions in the publishing industry as to whether this ruling is good or bad for authors and publishers. A good litmus test: how important is it to support independent booksellers?
The Authors Guild has written an initial reaction welcoming the ruling. They say it levels the playing field between brick-and-mortar stores and online retailers: “With sales taxes being dependent on an online retailer’s physical presence, online retailers could charge lower prices than brick-and-mortar stores, driving many mom-and-pop stores—as well as independent bookstores—out of existence.” Unsurprisingly, the American Booksellers Association filed an amicus brief in support of South Dakota’s lawsuit and praised the high court’s decision as “a major victory for sales tax fairness.”
Opponents of the law say that it creates a compliance burden for sellers. If the seller is a larger-volume business or corporation (such as Wayfair, the defendant in the ruling), compliance may not be difficult. But for an individual author, let’s say, who sells physical or digital goods and services through their site or elsewhere, the burden could be significant and a deterrent to growth. In the current ruling, such an individual would need to be aware of the tax code of each state and remit taxes as each state law directs. (Currently, most states have laws taxing internet sales—plus there are city tax codes that complicate matters.) However, experts say that because the court has been vague in its ruling, Congress may step in with legislation to avoid a compliance nightmare for small business owners. Also, there are automated solutions (one offered by Amazon) that help simplify the process.
Bottom line: Amazon itself already pays sales tax in all states; so do 17 of the 18 largest retailers in the US. Therefore, this ruling may primarily affect the online book-publishing industry via third-party sales made through Amazon (in the Amazon Marketplace). There, differences in prices can be quite small, and the requirement of state tax collection may reduce a Marketplace vendor’s competitive edge. Ironically, if Amazon Marketplace sellers are negatively affected, sales may simply shift to Amazon itself. Over time, the biggest benefit of the ruling may be that we’ll be able to test what has been assumed to be an unfair burden on physical bookstores.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
