SCOTUS Changes Sales and Use Tax Collection Nexus

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This morning, our colleagues on the State & Local Tax team published their Client Alert titled The U.S. Supreme Court Changes Sales and Use Tax Collection Nexus. In South Dakota v. Wayfair, Inc., the Court overrules the “physical presence” requirement as “unsound and incorrect.” Takeaways from the Court’s decision include:

  • South Dakota law satisfies the Commerce Clause “substantial nexus” requirement based on the “economic and virtual contacts” with the State.
  • The Wayfair decision does not prohibit the retroactive application of this new standard for Commerce Clause “substantial nexus.”
  • The decision strikes a blow to the Court’s stare decisis jurisprudence.