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10 

SOUTH DAKOTA v. WAYFAIR, INC. 

Opinion of the Court 

are  appropriate  to  the  twenty-first  century,  not  the  nine­
teenth.”  Hellerstein,  Deconstructing  the  Debate  Over 
State  Taxation  of  Electronic  Commerce,  13  Harv.  J. L.  & 
Tech.  549,  553  (2000).    Each  year,  the  physical  presence 
rule  becomes  further  removed  from  economic  reality  and 
results  in  significant  revenue  losses  to  the  States.    These 
critiques underscore that the physical presence rule, both
as  first  formulated  and  as  applied  today,  is  an  incorrect
interpretation of the Commerce Clause. 

A 
Quill  is  flawed  on  its  own  terms.  First,  the  physical
presence  rule  is  not  a  necessary  interpretation  of  the 
requirement that a state tax must be “applied to an activ­
ity with a substantial nexus with the taxing State.”  Com-
plete Auto, 430 U. S., at 279.  Second, Quill creates rather 
than  resolves  market  distortions.    And  third,  Quill  im-
poses the sort of arbitrary, formalistic distinction that the 
Court’s modern Commerce Clause precedents disavow. 

1 

All  agree  that  South  Dakota  has  the  authority  to  tax 
these transactions.  S. B. 106 applies to sales of “tangible 
personal  property,  products  transferred  electronically,  or 
services  for  delivery  into  South  Dakota.”    §1  (emphasis  
added).  “It has long been settled” that the sale of goods or
services  “has  a  sufficient  nexus  to  the  State  in  which  the 
sale  is  consummated  to  be  treated  as  a  local  transaction 
taxable  by  that  State.”    Oklahoma  Tax  Comm’n  v.  Jeffer-
son  Lines,  Inc.,  514  U. S.  175,  184  (1995);  see  also  2  C.
Trost  &  P.  Hartman,  Federal  Limitations  on  State  and 
Local  Taxation  2d  §11:1,  p.  471  (2003)  (“Generally  speak­
ing, a sale is attributable to its destination”). 

The  central  dispute  is  whether  South  Dakota  may  re­
quire  remote  sellers  to  collect  and  remit  the  tax  without
some  additional  connection  to  the  State.    The  Court  has