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On April 17 the Supreme Court heard oral arguments in South Dakota v. Wayfair, a case that has the potential to reshape the way products are bought and sold online in the United States. The core issue is whether the Supreme Court should overturn its 1992 decision in Quill Corp. v. North Dakota, which held that states could compel only entities with a physical presence inside the state’s physical borders to collect and remit sales tax. Though some justices had hinted that they would be in favor of the state in the current case, South Dakota’s attorneys may have given up that ground when they revealed just how far-reaching a win for the state would be. From big retail to Etsy knitters, South Dakota wants to tax it.In 2016, South Dakota passed Senate Bill 106, which sought to collect sales tax from any business that directed more than 200 separate transactions into the state in a year. This directly contravened decades of Supreme Court precedent leading up to the Quill decision. (There is no question that states have a right to impose sales tax when a resident makes a purchase online; the issue in this case is whether and when a state can require an out-of-state vendor to collect that tax.) The law is one of several “kill Quill†bills aimed at overturning precedent that rightly keeps states from regulating conduct outside their borders. South Dakota — and the 41 other states filing in a bipartisan effort to back it up — complain that precedent is making them “miss out†on uncollected sales-tax revenue. What they fail to mention, though, are the tremendous costs that vendors will have to bear if this precedent is overturned, and the constitutional barriers the Founders put up to prevent exactly this sort of behavior by the states . . .
