Quill not overruled by SD Supreme Court

The South Dakota Supreme Court on September 13, 2017 issued their opinion in the case of The State of South Dakota v. Wayfair, Inc., Overstock.com, Inc., and NewEgg, Inc. The Court stated:

“However persuasive the states [SD] arguments on the merits of revisiting the issue, Quill has not been overruled. Quill remains the controlling precedent on the issue of Commerce Clause limitations on interstate collection of sales and use taxes. We are mindful of the Supreme Court’s directive to follow its precedent when it “has direct application in a case” and to leave to that Court “the prerogative of overruling its own decisions.”

The opinion was rendered on appeal by the State of South Dakota to challenge a lower court decision that the recently enacted South Dakota sales tax law requiring sales tax to be collected on sales where no physical presence was maintained by the seller was unconstitutional according to the US Supreme Court ruling in North Dakota v. Quill Corporation.

The quick, taking only 16 days, negative decision rendered by the South Dakota Supreme Court may have been what the State of South Dakota was hoping for. The decision now allows the State of South Dakota to move this highly sensitive sales tax issue once again back to the US Supreme Court to revisit the issue of physical presence now that many more years of internet activity will be available for their arguments. And, as the South Dakota Supreme Court noted, provide the US Supreme Court the opportunity to overrule their decision in Quill.

Contact your Eide Bailly professional or a member of our State and Local Tax team to discuss your sales tax filing obligations.