June 21, 2018
Authored by: Bryan Cave and Charles Lin
In a highly anticipated decision, the U.S. Supreme Court has ruled in South Dakota v. Wayfair, Inc., that internet retailers can be required to collect sales and use tax in states in which they lack a physical presence, overturning 26 years of precedent barring states from taxing out-of-state sellers.
As we previously reported, South Dakota brought the suit, acknowledging that its position defies the Supreme Court’s holding in the 1992 case Quill Corp v. North Dakota, by arguing that the development of the internet and ensuing growth in online shopping necessitate reconsideration of the requirement that a business have a physical presence within a state in order to be subject to that state’s sales tax collection obligations.
By a 5-4 vote, the court found for South Dakota, holding that the state’s 2016 law mandating that certain out-of-state sellers collect and remit tax regardless of whether they had a physical