Chief Justice John Roberts quipped, “[w]hatever salience the adage ‘third time’s a charm’ has in daily life, it is a poor guide to Supreme Court decisionmaking.” However, the third time was indeed a charm for the states and other opponents of the physical presence rule as the U.S. Supreme Court, in South Dakota v. Wayfair Inc., overruled its prior decisions in National Bellas Hess Inc. v. Department of Revenue and Quill Corp. v. North Dakota and held that physical presence in a taxing state is not necessary for the state to require an outof-state seller to collect and remit the state’s sales and use taxes. While much attention will be paid to the outcome, the questions that the court has left for another day are just as important as businesses and practitioners begin to contemplate: “What happens now?”

Background -

In 1967, the U.S. Supreme Court held in National Bellas Hess that a foreign mailorder business with no physical presence in Illinois could not be required to collect and remit Illinois use tax under the due process and commerce clauses of the U.S. Constitution. Twenty-five years later in 1992, in Quill, the court reaffirmed the Bellas Hess physical presence rule for out-of-state sellers, albeit on the narrower basis of the commerce clause.

Originally published in Law360 on June 22, 2018.