Reed Smith Client Alerts

Today the United States Supreme Court granted cert in South Dakota v. Wayfair, et al., the lead case challenging the Court’s “physical presence” nexus rule reaffirmed in Quill Corp. v. North Dakota (“Quill”).1 The Court’s eventual decision in South Dakota v. Wayfair will directly impact other states that have enacted “kill-Quill” legislation or regulations. But the impact of the Court’s decision on other state efforts to increase sales and use tax collection on remote sales, without directly challenging Quill, either by enacting reporting regimes or by imposing sales tax collection obligations based on contacts with the jurisdiction that can be distinguished from the contacts presented by the taxpayer in Quill (for example, by enacting, “cookie nexus”, or platform legislation), is unclear.

Authors: Jonathan E. Maddison Sebastian C. Watt

The United States Supreme Court granted cert in South Dakota v. Wayfair, et al., the lead case challenging the Court’s “physical presence” nexus rule announced in National Bellas Hess v. Illinois2 and reaffirmed in Quill Corp. v. North Dakota.3

This case directly involves South Dakota S.B. 106, which imposes a sales tax collection obligation on an out-of-state seller if it:

  1. makes over $100,000 in gross revenue from sales of tangible personal property or services delivered to South Dakota; or
  2. completes 200 or more separate transactions for delivery to South Dakota.4