South Dakota v. Wayfair Inc., et al.

Summarized by:

  • Court: U.S. Supreme Court Certiorari Granted
  • Area(s) of Law: Tax Law
  • Date Filed: January 12, 2018
  • Case #: 17-494
  • Judge(s)/Court Below: 901 N.W.2d 754 (S.D. 2017)
  • Full Text Opinion

Whether the Supreme Court should abrogate Quill Corp. v. North Dakota's sales-tax-only, physical-presence requirement.

South Dakota relies on a retail sales tax for revenue. Pursuant to the Supreme Court’s decision in Nat’l Bellas Hess, Inc. v. Dep’t of Rev. of the St. of Ill., 386 U.S. 753 (1967) and Quill Corp. v. North Dakota, 504 U.S. 298 (1992), South Dakota cannot collect the tax from sellers that have no physical presence in the state because that “encourage[s] settled expectations and . . . foster[s] investment by businesses and individuals.” Id. at 316. In 2016, the South Dakota Legislature enacted a bill to obligate sellers without a physical presence to collect and pay the sales tax, specifically in response to the Supreme Court’s Commerce Clause precedent. 901 N.W.2d 754 (S.D. 2017). South Dakota sought declaratory judgment in circuit court against Respondent who had no physical presence within the State to be made to comply with the new legislation. The circuit court granted summary judgment for Respondent and enjoined the State from enforcing the new law because of the prohibition in Quill. The State Supreme Court affirmed the judgment because Quill has not been overruled. On appeal, the State argues that Quill should be overruled because Internet sellers have an unfair advantage over sellers with a physical presence in the state. Further, the State argues that Quill is outdated because technological and economic changes have removed the logistical issues sellers face in collecting sales tax from different jurisdictions that existed when Quill was decided.


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