SALT Report 2018-4
The US Supreme Court will be hearing oral arguments one month from today on April 17, 2018. This case merits attention from all business and consumers as the force of this decision has the potential to open a paradigm shifting pathway to revenue collection on the part of the state and local community. By mid year SCOTUS should be releasing their opinion.
17-494 SOUTH DAKOTA V. WAYFAIR, INC.
DECISION BELOW: 901 N.W.2d 754
CERT. GRANTED 1/12/2018
QUESTION PRESENTED:In 1967, this Court held that the dormant commerce clause prohibits a State from
requiring catalog retailers to collect sales taxes on sales into the State unless the retailer is
“physically present” there. Nat’l Bellas Hess v. Dep’t of Rev. of Ill., 386 U.S. 753 (1967).
That rule, questionable even then, became an isolated outlier when Complete Auto Transit, Inc.
v. Brady, 430 U.S. 274, 279 (1977), held that only a “substantial nexus” was needed for other
state taxes affecting interstate commerce. In Quill Corp. v. North Dakota, 504 U.S. 298 (1992),
this Court was asked to correct that aberration. But despite a vigorous dissent-and the lack of a
similar, “physical presence” rule for any other type of tax, id. at 317-this Court tentatively
retained the requirement on stare decisis grounds.
The legal and practical developments of the past 25 years strongly recommend revisiting
that judgment. Quill has grown only more doctrinally aberrant, and has been roundly criticized
by members of this Court, including Justices Kennedy, Thomas, and Gorsuch. But while its legal
rationales have imploded with experience, its practical impacts have exploded with the rapid
growth of online commerce. Today, States’ inability to effectively collect sales tax from internet
sellers imposes crushing harm on state treasuries and brick-and-mortar retailers alike. “Given
these changes … , it is unwise to delay any longer a reconsideration of the Court’s holding in
Quill.” Direct Mktg. Ass’n v. Brohl, 135 S. Ct. 1124, 1135 (2015) (Kennedy J., concurring).
The question presented is:
Should this Court abrogate Quill’s sales-tax-only, physical-presence requirement?
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