In a 5-4 decision, the United States Supreme Court eliminated the physical presence test that determined if a state can force a seller to collect its sales and/or use tax In the case of South Dakota v. Wayfair, USSC Case No. 17-494 all of the Justices agreed that the physical presence test applied previously in the cases of National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753, and Quill Corp. v. North Dakota, 504 U. S. 298 was inappropriate. However, the four Justices making up the minority in the dissenting opinion argued that the physical presence rule should have remained in place due to the fact that entities have acted for years in reliance on that standard.
The Court had limited states to imposing sales and use tax collection responsibilities only on sellers that had a physical presence in the state in the National Bella Hess case. Twenty five years after that case, the Court again agreed that physical presence was necessary in the Quill case. Now, 26 years later, the Court, visiting the issue for the third time has reversed that position –and two of the five Justices in the majority had previously ruled for the opposite result in the Quill case.
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