At a Glance...

Just two weeks after holding oral argument, the South Dakota Supreme Court issued its decision in South Dakota v. Wayfair, et al., striking down South Dakota's "kill-Quill" law. South Dakota's law would have imposed sales tax collection and remittance obligations on out-of-state retailers. The state is expected to file a petition for a writ of certiorari with the United States Supreme Court.

Today, the South Dakota Supreme Court published its opinion in South Dakota v. Wayfair¸ holding that SB 106—imposing sales tax collection and remittance obligations on out-of-state retailers—violates the dormant Commerce Clause of the United States Constitution.1 The court held that the United States Supreme Court's decisions in National Bellas Hess v. Illinois2 and Quill Corp. v. North Dakota3 commanded such a result. Those decisions, issued in 1967 and 1992, respectively, require retailers to be "physically present" in a state in order to have an obligation to collect and remit sales and use tax on sales to in-state customers.

At oral argument, the state conceded that SB 106 directly conflicted with Quill's physical presence rule. The state did not ask the court to overturn Quill and National Bellas Hess, but instead urged the court to issue a decision urging the United States Supreme Court to grant cert and, in turn, overturn the physical presence rule. The court's decision strikes down SB 106, but makes no comment regarding whether or not the United States Supreme Court should grant cert. The court simply held that

However persuasive the State's arguments on the merits of revisiting the issue, Quill has not been overruled. Quill remains the controlling precedent on the issue of Commerce Clause limitations on interstate collection of sales and use taxes. We are mindful of the Supreme Court's directive to follow its precedent when it "has direct application in a case" and to leave to that Court "the prerogative of overruling its own decisions."4

What's Next? The court's decision is unsurprising, given that SB 106 directly conflicted with the United States Supreme Court precedent. The state has until December 12, 2017, to file its anticipated cert petition (although an extension to file may be granted). We expect numerous amicus curiae briefs to be filed on behalf of both the state and the out-of-state retailers.


1. State of South Dakota v. Wayfair Inc., Inc. & Newegg, Inc., 2017 S.D. 56 (2017) (hereinafter "South Dakota v. Wayfair").

2. 386 U.S. 753 (1967).

3. 504 U.S. 298 (1992).

4. South Dakota v. Wayfair, 2017 S.D. 56 at ¶ 18 (quoting Rodriguez de Quijas v. Shearson/American Exp., Inc., 490 U.S. 477, 484 (1989).  

This article is presented for informational purposes only and is not intended to constitute legal advice.