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SOUTH DAKOTA v. WAYFAIR, INC. 

Syllabus 

Hess,  Inc.  v.  Department  of  Revenue  of  Ill.,  386  U. S.  753,  are  over-
ruled.  Pp. 5–24.

(a) An  understanding  of  this  Court’s  Commerce  Clause  principles

and their application to state taxes is instructive here.  Pp. 5–9.

(1) Two primary principles mark the  boundaries of  a  State’s  au-
thority  to  regulate  interstate  commerce:  State  regulations  may  not
discriminate  against  interstate  commerce;  and  States  may  not  im-
pose undue burdens on interstate commerce.  These principles guide 
the  courts  in  adjudicating  challenges  to  state  laws  under  the  Com-
merce Clause.  Pp. 5–7.

(2) They  also  animate  Commerce  Clause  precedents  addressing
the validity of state taxes, which will be sustained so long as they (1) 
apply  to  an  activity  with  a  substantial  nexus  with  the  taxing  State,
(2)  are  fairly  apportioned,  (3)  do  not  discriminate  against  interstate
commerce,  and  (4)  are  fairly  related  to  the  services  the  State  pro-
vides.  See Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 279. 
Before  Complete  Auto,  the  Court  held  in  Bellas  Hess  that  a  “seller 
whose only connection with customers in the State is by common car-
rier  or  . . .  mail”  lacked  the  requisite  minimum  contacts  with  the
State required by the Due Process Clause and the Commerce Clause,
and  that  unless  the  retailer  maintained  a  physical  presence  in  the
State, the State lacked the power to require that retailer to collect a 
local  tax.    386  U. S.,  at  758.   In  Quill,  the  Court  overruled  the  due 
process holding, but not the Commerce Clause holding, grounding the
physical  presence  rule  in  Complete  Auto’s  requirement  that  a  tax
have a “substantial nexus” with the activity being taxed.  Pp. 7–9.

(b) The  physical  presence  rule  has  long  been  criticized  as  giving 
out-of-state  sellers  an  advantage.    Each  year,  it  becomes  further  re-
moved from economic reality and results in significant revenue losses
to the States.  These critiques underscore that the rule, both as first 
formulated and as applied today, is an incorrect interpretation of the 
Commerce Clause.  Pp. 9–17.

(1) Quill is flawed on its own terms.  First, the physical presence
rule  is  not  a  necessary  interpretation  of  Complete  Auto’s  nexus  re-
quirement.    That  requirement  is  “closely  related,”  Bellas  Hess,  386 
U. S. at 756, to the due process requirement that there be “some defi-
nite link, some minimum connection, between a state and the person, 
property or transaction it seeks to tax.”  Miller Brothers Co. v. Mary-
land, 347 U. S. 340, 344–345.  And, as Quill itself recognized, a busi-
ness  need  not  have  a  physical  presence  in  a  State  to  satisfy  the  de-
mands of due process.  When considering whether a State may levy a 
tax, Due Process and Commerce Clause standards, though not identi-
cal  or  coterminous,  have  significant  parallels.    The  reasons  given  in 
Quill for rejecting the physical presence rule for due process purposes