US Supreme Court Grants First Review of Sales Tax Nexus Case in 25 Years, Potentially Impacting Remote Sellers of All Sizes

On January 12, 2018, the US Supreme Court granted certiorari to South Dakota’s appeal of its state supreme court’s opinion in South Dakota v. Wayfair, Inc. et al.

The case deals with economic nexus for sales taxes and challenges the physical presence nexus standard established by the US Supreme Court’s 1992 decision in Quill v. North Dakota, which requires that a seller have a physical presence in a state before a state can require that seller to collect and remit sales and use tax.

Why It Matters

By granting certiorari, the US Supreme Court has agreed to revisit Quill and decide whether or not a physical presence will remain the standard for sales tax nexus. If the court decides in favor of South Dakota, it will likely mean a greatly increased compliance burden for remote sellers as they try to navigate their new collection and filing obligation across the thousands of tax jurisdictions they sell into.


In 2016, the South Dakota legislature enacted Senate Bill (SB) 106 which, among other things, required any entity that exceeded $100,000 in annual sales in South Dakota or 200 separate transactions in the state to collect and remit South Dakota sales tax. Notably, the criteria used for mandating the collection and remittance of sales tax didn’t include the seller first being physically present in the state.  

On September 14, 2017, the South Dakota Supreme Court struck down the state’s economic nexus law and ruled in favor of the plaintiff, Wayfair, Inc., an online retailer, holding that the physical presence standard set by Quill  invalidated South Dakota’s economic nexus provision. 

Several states—including Alabama, Tennessee, Vermont, Massachusetts, and more—have expanded their sales tax nexus provisions to eliminate physical presence as a precondition. Others have pending legislation to adopt a similar economic nexus standard as South Dakota.

Next Steps

The Court will likely set an April 2018 date for oral arguments in this case, based on its current calendar. Once argued, a decision will probably be issued by end of June of 2018.

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For more information about how this court decision might affect you or your business, contact your Moss Adams professional or email

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