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Certiorari granted in South Dakota case seeking to overturn “Quill”

Certiorari granted in South Dakota case, overturn Quill

The U.S. Supreme Court today granted certiorari in a case in which South Dakota seeks to have a statute imposing economic nexus standards on remote sellers upheld by the Court. In its petition for certiorari, South Dakota asked the Court to revisit and abrogate the sales and use tax physical presence nexus requirement upheld in “Quill v. North Dakota.”


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The case is: South Dakota v. Wayfair, Inc., cert. granted (January 12, 2018) (No. 17-494)


In 2016, South Dakota became the first state to enact “pure” economic nexus provisions for sales and use tax purposes. Specifically, effective May 1, 2016, all entities with annual sales in South Dakota exceeding $100,000 or with more than 200 separate transactions in the state were required to collect and remit South Dakota sales and use tax. These provisions were intended to―and quickly did―jump-start litigation because the measures directly contravened the Quill physical presence standard.

In September 2017, the South Dakota Supreme Court held that the state was bound to follow established U.S. Supreme Court precedent, and therefore, the law imposing economic nexus standards on remote retailers was not valid in light of the physical presence standard.  In reaching this conclusion, the state’s high court rejected the state’s arguments that the Quill physical presence standard is outdated in light of advances in software and technology. South Dakota, as expected, petitioned for certiorari.

KPMG observation

The granting of certiorari in this case may have sweeping implications for all states and state taxpayers.  

It remains to be seen when the oral arguments will be scheduled, but it is believed the case will be heard in the spring. It also remains to be seen whether the Court will accept South Dakota’s invitation to overturn Quill. Whatever the outcome, the holding will have a significant impact on remote sellers and on states. About a dozen other states have enacted laws similar or somewhat similar to South Dakota’s measures.


Read a January 2018 report [PDF 44 KB] prepared by KPMG LLP

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