Document ID: ./input/supremecourt_opinions/opinions/17pdf/17-494_j4el.pdf
Page Number: 7.0

2 

SOUTH DAKOTA v. WAYFAIR, INC. 

Opinion of the Court 

I 

Like most States, South Dakota has a sales tax.  It taxes 
the  retail  sales  of  goods  and  services  in  the  State.    S. D. 
Codified Laws §§10–45–2, 10–45–4 (2010 and Supp. 2017).
Sellers are generally required to collect and remit this tax
to the Department of Revenue.  §10–45–27.3.  If for some 
reason the sales tax is not remitted by the seller, then in­
state  consumers  are  separately  responsible  for  paying  a 
use tax at the same rate.  See §§10–46–2, 10–46–4, 10–46– 
6.  Many States employ this kind of complementary sales 
and use tax regime.

Under  this  Court’s  decisions  in  Bellas  Hess  and  Quill, 
South  Dakota  may  not  require  a  business  to  collect  its 
sales  tax  if  the  business  lacks  a  physical  presence  in  the 
State.  Without  that  physical  presence,  South  Dakota 
instead must rely on its residents to pay the use tax owed
on  their  purchases  from  out-of-state  sellers.    “[T]he  im­
practicability  of  [this]  collection  from  the  multitude  of 
individual  purchasers  is  obvious.”  National  Geographic 
Soc.  v.  California  Bd.  of  Equalization,  430  U. S.  551,  555 
(1977).  And  consumer  compliance  rates  are  notoriously
low.  See,  e.g.,  GAO,  Report  to  Congressional  Requesters: 
Sales  Taxes,  States  Could  Gain  Revenue  from  Expanded
Authority,  but  Businesses  Are  Likely  to  Experience  Com­
pliance  Costs  5  (GAO–18–114,  Nov.  2017)  (Sales  Taxes
Report);  California  State  Bd.  of  Equalization,  Revenue
Estimate:  Electronic  Commerce  and  Mail  Order  Sales  7 
(2013) (Table 3) (estimating a 4 percent collection rate).  It 
is estimated that Bellas Hess and Quill cause the States to 
lose  between  $8  and  $33  billion  every  year.    See  Sales 
Taxes Report, at 11–12 (estimating $8 to $13 billion); Brief
for  Petitioner  34–35  (citing  estimates  of  $23  and  $33.9 
billion).  In South Dakota alone, the Department of Reve­
nue estimates revenue loss at $48 to $58 million annually.
App. 24.  Particularly because South Dakota has no state 
income  tax,  it  must  put  substantial  reliance  on  its  sales