Document ID: ./input/supremecourt_opinions/opinions/17pdf/17-494_j4el.pdf
Page Number: 4

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SOUTH DAKOTA v. WAYFAIR, INC. 

Syllabus

(c) Stare  decisis  can  no  longer  support  the  Court’s  prohibition  of  a 
valid exercise of the States’ sovereign power.  If it becomes apparent
that the Court’s Commerce Clause decisions prohibit the States from
exercising their lawful sovereign powers, the Court should be vigilant 
in correcting the error.  It is inconsistent with this Court’s proper role 
to  ask  Congress  to  address  a  false  constitutional  premise  of  this
Court’s own creation.  The Internet revolution has made Quill’s orig-
inal  error  all  the  more  egregious  and  harmful.    The  Quill  Court  did 
not have before it the present realities of the interstate marketplace,
where the Internet’s prevalence and power have changed the dynam-
ics  of  the  national  economy.    The  expansion  of  e-commerce  has  also
increased  the  revenue  shortfall  faced  by  States  seeking  to  collect 
their  sales  and  use  taxes,  leading  the  South  Dakota  Legislature  to
declare  an  emergency.  The  argument,  moreover,  that  the  physical 
presence  rule  is  clear  and  easy  to  apply  is  unsound,  as  attempts  to
apply  the  physical  presence  rule  to  online  retail  sales  have  proved 
unworkable. 

Because the physical presence rule as defined by Quill is no longer
a clear or easily applicable standard, arguments for reliance based on
its clarity are misplaced.  Stare decisis may accommodate “legitimate 
reliance interest[s],” United States v. Ross, 456 U. S. 798, 824, but a 
business  “is  in  no  position  to  found  a  constitutional  right  . . .  on  the 
practical opportunities for tax avoidance,” Nelson v. Sears, Roebuck & 
Co.,  312  U. S.  359,  366.    Startups  and  small  businesses  may  benefit
from the physical presence rule, but here South Dakota affords small 
merchants  a  reasonable  degree  of  protection.    Finally,  other  aspects 
of the Court’s Commerce Clause doctrine can protect against any un-
due  burden  on  interstate  commerce,  taking  into  consideration  the
small businesses, startups, or others who engage in commerce across
state lines.  The potential for such issues to arise in some later case
cannot justify retaining an artificial, anachronistic rule that deprives
States of vast revenues from major businesses.  Pp. 17–22. 

(d) In  the  absence  of  Quill  and  Bellas  Hess,  the  first  prong  of  the 
Complete Auto test simply asks whether the tax applies to an activity
with  a  substantial  nexus  with  the  taxing  State,  430  U. S.,  at  279.
Here,  the nexus  is  clearly  sufficient.    The  Act  applies  only  to  sellers
who engage in a significant quantity of business in the State, and re-
spondents  are  large,  national  companies  that  undoubtedly  maintain
an  extensive  virtual  presence.    Any  remaining  claims  regarding  the 
Commerce  Clause’s  application  in  the  absence  of  Quill  and  Bellas 
Hess may be addressed in the first instance on remand.  Pp. 22–23. 

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

KENNEDY,  J.,  delivered  the  opinion  of  the  Court,  in  which  THOMAS,