The U.S. Supreme Court is nearing a ruling in a case that could completely change the way states tax online commerce. A decision is expected by late June in South Dakota v. Wayfair, a direct challenge to the 1992 decision in Quill Corp. v. North Dakota, which prohibits states from imposing sales tax collection obligations on vendors lacking an in-state physical presence. The case was argued to the U.S. Supreme Court on April 17.
The case came to the U.S. Supreme Court after e-retailers Wayfair Inc., Overstock.com Inc. and Newegg Inc. challenged South Dakota’s digital sales tax statute, S.B. 106 (S.D. Codified Laws Chapter 10-64), which the South Dakota Supreme Court last year found unconstitutional under Quill.
Federal legislation to both codify and overturn Quill is currently active but there has been no movement from Congress.
Rep. Kristi Noem (R-SD) is the sponsor of the Remote Transactions Parity Act of 2017 (H.R. 2193) (RTPA), which seeks to undo Quill. Alongside the RTPA is the Marketplace Fairness Act of 2017 (S.976), sponsored by Sen. Mike Enzi (R-WY).
On the other side of the spectrum is the No Regulation Without Representation Act of 2017 (H.R. 2887), sponsored by Rep. Jim Sensenbrenner (R-WI), which would codify Quill’s physical-presence standard. The bill received a House Judiciary subcommittee hearing in July 2017 but hasn’t moved since then.