United States

U.S. Supreme Court to take up Quill challenge


On Jan. 12, 2018, the United States Supreme Court granted certiorari in South Dakota v. Wayfair, Inc., et al (Docket No. 17-459), to consider the continued viability of the physical presence nexus standard as applied to sales and use tax. Oral arguments will likely be heard in April, and a decision is expected by the end of the summer.  

This will be the first time the court has addressed a state tax nexus case since the physical presence standard was adopted in Quill v. North Dakota in 1992. South Dakota adopted its economic sales and use tax nexus provision in 2016, followed by several other states enacting or promulgating similar provisions, many of which are currently challenged.

The genesis of economic sales tax nexus laws can be attributed to Justice Kennedy’s 2015 concurrence in the Direct Marketing Association decision, where he suggested that Quill’s physical presence standard was harming state revenues and should be reconsidered. The original Quill court, which included Justice Kennedy, noted that Congress was better qualified to resolve the issue of remote taxation. In the past decade, numerous proposals have been introduced in Congress, including the Marketplace Fairness Act, intended to provide a solution to lost sales and use tax revenue from remote and e-commerce. None of those provisions made much headway, and only one received a floor vote from the U.S. Senate.

For more information regarding this case, please see our prior alert, South Dakota takes aim at Quill. Additional information on the current economic sales tax nexus landscape and the conditions leading up to the case can be found here. For more information on remote seller considerations, please read our white paper, What’s the deal with sale and use tax on remote purchases?


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