State may require out-of-state retailers to collect sales tax
On June 21, the U.S. Supreme Court ruled in South Dakota v. Wayfair, Inc., et al. that states may require out-of-state retailers to collect sales taxes, even if the retailer has no physical presence in the state.
The case centered around South Dakota’s law requiring businesses selling more than $100,000 in goods per year in the state, or conducting 200 or more transactions per year with South Dakota customers, to collect and remit sales taxes.
The law had been passed in the wake of comments by Justice Anthony Kennedy in 2015 suggesting that the major precedent in this area of law, the 1992 case Quill Corp. v. North Dakota, was ripe for re-examination.
Quill dealt with mail-order catalog sales and held that physical presence in a state was necessary in order for a state to require a business to collect sales taxes (reaffirming a 1967 precedent). In a major victory for states and localities, the Wayfair ruling overturns the Court’s previous holding in Quill.
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