June 21, 2018
South Dakota v. Wayfair, Inc., No. 17-494
Decided June 21, 2018
Today, the Supreme Court held 5-4 that States may require internet retailers to collect sales taxes on online purchases.
In Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the Supreme Court reaffirmed that States could not require catalog retailers to collect sales taxes if the retailers were not physically present in the State. In a 2015 concurrence, Justice Kennedy urged the Court to reconsider Quill because it inflicted “extreme harm and unfairness” on States unable to tax the ever-growing number of online transactions. That urging spurred multiple States, including South Dakota, to require internet retailers to collect sales taxes notwithstanding their lack of a physical presence in the State. South Dakota then sued a number of internet retailers for not collecting sales taxes.
Whether the Court should overrule Quill’s physical presence requirement and allow States to require retailers to collect sales taxes, even if the retailer is not physically present in the State.
States may require the collection of sales taxes by retailers with no physical presence in the State.
“In the name of federalism and free markets, Quill does harm to both. The physical presence rule it defines has limited States’ ability to seek long-term prosperity and has prevented market participants from competing on an even playing field.”
Justice Kennedy, writing for the majority
What It Means:
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