E-COMMERCE

Issues

The Supreme Court will decide whether to overturn Quill Corp. v. North Dakota, which held that the Commerce Clause prohibits states from imposing sales or use taxes on out-of-state sellers. Petitioner South Dakota argues that in modern times, a business may not have a physical presence in a state, yet still satisfy the “substantial nexus” requirement as articulated in Complete Auto Transit v. Brady. South Dakota further argues that increases in electronic commerce, concerns with states’ ability to collect adequate revenues, and overall changes in the national economy favoring online sellers weigh in favor of overturning Quill, despite stare decisis. In contrast, Respondent Wayfair, Inc. argues that changes in market conditions do not justify overturning Quill, especially when the underlying constitutional concerns of restraints on interstate commerce remain. Wayfair further argues that imposing sales taxes on remote sellers will unfairly burden small businesses with appreciable compliance costs, especially as the largest online sellers, such as Amazon, already voluntarily pay state sales taxes. If the Court rules in South Dakota’s favor, online retailers will be subject to state sales and use taxes, and likely raise the prices of the goods they sell. If the Court instead rules in Wayfair’s favor and upholds Quill, online retailers will continue to have an apparent advantage compared to local brick-and-mortar businesses.

Questions as Framed for the Court by the Parties

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