Legal Challenge to Quill Could Achieve Sales Tax Parity

Retail Litigation Center (RLC) President Deborah White issued the following statement assessing the lawsuit filed today by the state of South Dakota challenging the physical presence standard set forth by the 1992 Supreme Court Quill decision.  

“Last year, in his concurring opinion in DMA v. Brohl, Justice Kennedy asked the legal system to develop a case so that the U.S. Supreme Court could reexamine the Court’s holding in Quill.  The State of South Dakota has done just that.” 

“We applaud South Dakota for developing litigation that should ultimately enable the U.S. Supreme Court to reconsider its decision in Quill, which does not reflect the reality of 21st century technology. Today’s retailers can be virtually ‘present’ everywhere.  A legal rule that artificially distinguishes between retailers with physical stores inside a state’s geographic borders and without such stores is an anachronism today.  We urge South Dakota’s judiciary to act quickly to facilitate resolution of this important issue.”   

In his 2015 concurring opinion Justice Kennedy said, ‘[t]he Internet has caused far-reaching systemic and structural changes in the economy’ so that ‘a business may be present in a State in a meaningful way without that presence being physical in the traditional sense of the word.’  Further noting the significant economic harms that were befalling state treasuries and local retailers, Justice Kennedy said that ‘it is unwise [for the US Supreme Court] to delay any longer a reconsideration of the Court’s holding in Quill’ and asked the ‘legal system [to] find an appropriate case for this Court to reexamine Quill.’   

Earlier this year, the South Dakota legislature passed a bill, which was signed by the governor in March, that expressly authorizes the State to seek judicial resolution of the core legal issue through a declaratory judgment action and that directs the circuit court to act “as expeditiously as possible.” The legislation further asks the circuit court to assume that its consideration can be completed through procedural motions, rather than requiring a full trial.  Appeals from the State circuit court’s decision may only be made to the state Supreme Court, which is also directed to act “as expeditiously as possible.” 

Second, and critically, the legislation recognizes the “complicated position” in which it places remote sellers and builds in protections.  For example, the declaratory judgment motion also triggers an injunction for the pendency of the litigation that prevents the State from enforcing the law’s obligation until the core legal issue is finally adjudicated. The legislation further prohibits the State from applying the tax obligation retroactively, which should assuage any concerns that a judicial decision invalidating Quill might require sellers to remit taxes that were owed by consumers on sales transactions but that the seller had not collected.  


The Retail Litigation Center is a public policy organization that identifies and engages in legal proceedings which affect the retail industry.  The RLC, whose members include some of the country's largest retailers, was formed to provide courts with retail industry perspectives on significant legal issues, and highlight the potential industry-wide consequences of legal principles that may be determined in pending cases.  

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