“It is unwise to delay any longer a reconsideration of the court’s holding in Quill,” he wrote. “A case questionable even when decided, Quill now harms states to a degree far greater than could have been anticipated earlier.”
South Dakota responded to Justice Kennedy’s invitation by enacting a new law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state. State officials sued three large online retailers — Wayfair, Overstock and Newegg — for violating the law.
“The South Dakota law is obviously a test case,” Justice Samuel A. Alito Jr. said. “It was designed to be the most reasonable incarnation of this scheme.”
Lower courts ruled for the retailers, citing the Quill decision.
In recent weeks, President Trump has criticized Amazon.com for its tax and shipping practices. Amazon, which is not involved in the case before the Supreme Court, collects sales taxes for goods that it sells directly but not for merchandise sold by third parties. Critics said that Mr. Trump’s critique was motivated by his displeasure with reporting from The Washington Post, which is owned by Amazon’s founder, Jeff Bezos
At Tuesday’s argument, Marty J. Jackley, South Dakota’s attorney general, argued that the Quill decision does not make sense in the digital era. He said that the major practical problem it had identified — that it would be burdensome for out-of-state retailers to calculate and collect taxes for thousands of state and local jurisdictions — has been solved by modern software.
But that assertion was hotly disputed by George S. Isaacson, a lawyer for the three internet retailers, who said a ruling against his clients would impose burdens on small internet companies. A national solution, he said, should come from Congress rather than the Supreme Court.
A decision in the case, South Dakota v. Wayfair, No. 17-494, is expected by June.