South Dakota v. Wayfair

138 S.Ct.2080 (2018)

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Nature of the Case

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Facts

South Dakota passed an Act to provide for the collection of sales taxes from certain remote sellers, to establish certain Legislative findings, and to declare an emergency. The legislature found that the inability to collect sales tax from remote sellers was “seriously eroding the sales tax base” and “causing revenue losses and imminent harm . . . through the loss of critical funding for state and local services.” The legislature expressed its intention to “apply South Dakota’s sales and use tax obligations to the limit of federal and state constitutional doctrines” and noted the urgent need for the Supreme Court to reconsider its precedents. The Act requires out-of-state sellers to collect and remit sales tax “as if the seller had a physical presence in the state.” The Act applies only to sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State. Wayfair, Inc., Overstock.com, Inc., and Newegg, Inc., (Ds) are merchants with no employees or real estate in South Dakota. Each of these three companies ships its goods directly to purchasers throughout the United States, including South Dakota. Each easily meets the minimum sales or transactions requirement of the Act, but none collects South Dakota sales tax. South Dakota filed a declaratory judgment action against D in state court, seeking a declaration that the requirements of the Act are valid and applicable to respondents and an injunction requiring respondents to register for licenses to collect and remit sales tax. Ds moved for summary judgment, arguing that the Act is unconstitutional. South Dakota asked this Court to review those earlier decisions in light of current economic realities. The trial court granted summary judgment to Ds. The South Dakota Supreme Court affirmed and the Supreme Court granted certiorari.