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- Title
DING DONG QUILL IS DEAD: HOW SOUTH DAKOTA V. WAYFAIR ALTERS THE SUBSTANTIAL NEXUS TEST UNDER COMPLETE AUTO.
- Authors
Rosenbach, J. Scott
- Abstract
We have been groomed from an early age, as consumers, to understand that the advertised price of an item is more often than not, not the actual price to be paid--the advertised price typically does not include state and local sales tax--$.99 actually means more like $1.08. However, in the world of e-commerce, the opposite is, or was, true. Since 1967, under the regime of National Bellas Hess, Inc. v. Department of Revenue of Illinois, and its predecessor Quill Corp. v. North Dakota, a state could not impose or collect sales tax from an out-of-state or online retailer unless the retailer had a physical presence in that state. This standard was known as the physical presence rule. For online and out-of-state retailers, the physical presence rule served as a judicially created tax shelter that resulted in a discriminatory effect on in-state, brick-and-mortar retailers. For states and localities, the physical presence rule severely impeded the ability to generate tax revenue, which ultimately hindered the ability to provide fundamental public benefits and services. Finally, in 2018, in South Dakota v. Wayfair, the U.S. Supreme Court overruled National Bellas Hess and Quill, consequently abrogating the physical presence rule. And, although this ruling was revolutionary and long overdue, it was also defective. This Comment first argues that the Supreme Court correctly decided Wayfair. However, this Comment will also argue that, despite correctly deciding the case, the Supreme Court's replacement for the physical presence rule, the economic and virtual contacts rule, fails to provide intelligible guidance as to how to measure substantial nexus under Complete Auto v. Brady. Last, this Comment argues that the Wayfair economic and virtual contacts rule blurs the demarcation between the Commerce Clause and the Due Process Clause in the context of substantial nexus. Though case law suggests that Complete Auto interprets the Commerce Clause exclusively, Wayfair upsets that scheme and injects due process concerns into an examination of substantial nexus under Complete Auto. And thus, going forward, courts should look to due process principles, particularly those established in International Shoe Co. v. Washington, its progeny, and World-Wide Volkswagen Corp. v. Woodson, for guidance on how to apply the economic and virtual contacts rule in measuring when an out-of-state or online retailer's contacts with a state are such that a substantial nexus has been established.
- Subjects
SOUTH Dakota; WAYFAIR LLC; CONSUMER protection lawsuits; PRODUCT advertising; ELECTRONIC commerce
- Publication
Denver Law Review, 2019, Vol 97, Issue 1, p261
- ISSN
2469-6463
- Publication type
Article