SeeSALT Blog
TAKEAWAYS
- The Court holds that the South Dakota law satisfies the Commerce Clause “substantial nexus” requirement based on the “economic and virtual contacts” with the State.
- The Wayfair decision does not prohibit the retroactive application of this new standard for Commerce Clause “substantial nexus.”
- The decision strikes a blow to the U.S. Supreme Court’s stare decisis jurisprudence.
The Supreme Court in South Dakota v. Wayfair, Inc. overruled the “physical presence” requirement as “unsound and incorrect” and ruled that “substantial nexus” is satisfied when an out-of-state seller has sufficient “economic and virtual contacts” with the state. The prior Supreme Court precedent in National Bellas Hess, Inc. v. Department of Revenue of Illinois and Quill Corp. v. North Dakota required out-of-state sellers to collect and remit sales/use tax on retail sales of certain tangible personal property and services only if the seller had “physical presence” with the state.