Not a Lexis Advance subscriber? Try it out for free.

South Dakota v. Wayfair, Inc.

Supreme Court of the United States

April 17, 2018, Argued; June 21, 2018, Decided

No. 17-494.

Case Summary

Overview

HOLDINGS: [1]-The State of South Dakota was not prohibited under the Commerce Clause of the U.S. Constitution from enacting legislation which required remote sellers to collect and remit sales tax on goods and services sold to buyers for delivery in the State, even though a business that made the sale did not have a physical presence in the State; [2]-The physical presence rule of Quill Corp. v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992), which prohibited South Dakota from enforcing S. 106, 2016 Leg. Assembly, 91st Sess. (S. D. 2016), was unsound and incorrect, and the Supreme Court’s decisions in Quill and in National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, 87 S. Ct. 1389, 18 L. Ed. 2d 505 (1967), were overruled.

Outcome

The Supreme Court vacated the Supreme Court of South Dakota's judgment dismissing the State's declaratory judgment action against several remote merchants, and remanded the case. 5-4 Decision; 2 concurrences; 1 dissent.

LexisNexis® Headnotes

 

 

Constitutional Law > Congressional Duties & Powers > Commerce Clause > Interstate Commerce

Governments > State & Territorial Governments

HN1  Interstate Commerce

The Constitution grants Congress the power to regulate commerce among the several States. U.S. Const. art. I, § 8, cl. 3. The Commerce Clause reflects a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation. Although the Commerce Clause is written as an affirmative grant of authority to Congress, the United States Supreme Court has long held that in some instances it imposes limitations on the States absent congressional action. Of course, when Congress exercises its power to regulate commerce by enacting legislation, the legislation controls. But the Supreme Court has observed that in general Congress has left it to the courts to formulate the rules to preserve the free flow of interstate commerce.

 

Governments > State & Territorial Governments

Constitutional Law > ... > Commerce Clause > Interstate Commerce > Tests

HN2  State & Territorial Governments

Modern precedents rest upon two primary principles that mark the boundaries of a State’s authority to regulate interstate commerce. First, state regulations may not discriminate against interstate commerce; and second, States may not impose undue burdens on interstate commerce. State laws that discriminate against interstate commerce face a virtually per se rule of invalidity. State laws that regulate even-handedly to effectuate a legitimate local public interest will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. Although subject to exceptions and variations, these two principles guide the courts in adjudicating cases challenging state laws under the Commerce Clause.

 

Tax Law > State & Local Taxes > Administration & Procedure > Collection of Taxes

Constitutional Law > ... > Commerce Clause > Interstate Commerce > Tests

Governments > State & Territorial Governments > Finance

HN3  Collection of Taxes

The United States Supreme Court explained the now-accepted framework for state taxation in Complete Auto Transit, Inc. v. Brady. The Court held that a State may tax exclusively interstate commerce so long as the tax does not create any effect forbidden by the Commerce Clause. After all, interstate commerce may be required to pay its fair share of state taxes. The Court will sustain a tax so long as it (1) applies to an activity with a substantial nexus with the taxing State, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to the services the State provides.

Access the full text caseNot a Lexis Advance subscriber? Try it out for free.

138 S. Ct. 2080 ; 201 L. Ed. 2d 403 ; 2018 U.S. LEXIS 3835 ; 27 Fla. L. Weekly Fed. S 388; 2018 Comm. Reg. (P & F) 74; 2018 WL 3058015

SOUTH DAKOTA, Petitioner v. WAYFAIR, INC., et al.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: On remand at, Remanded by, Decision reached on appeal by State v. Wayfair Inc., 2018 SD 62, 916 N.W.2d 819, 2018 S.D. LEXIS 101 (Aug. 9, 2018)

Prior History:  [1] ON WRIT OF CERTIORARI TO THE SUPREME COURT OF SOUTH DAKOTA

State v. Wayfair Inc., 2017 SD 56, 901 N.W.2d 754, 2017 S.D. LEXIS 111 (Sept. 13, 2017)

Disposition: 2017 S.D. 56, 901 N. W. 2d 754, vacated and remanded.