Amicus Briefs: South Dakota v. Wayfair Not So Brief After All!

Rule 37.1 of the Rules of the Supreme Court of the United States declares that, “An amicus curiae brief that brings to the attention of the Court relevant matter not already brought to its attention by the parties may be of considerable help to the Court. An amicus curiae brief that does not serve this purpose burdens the Court, and its filing is not favored.”

It is common to see amicus briefs when reading or researching case law. However, I thought it slightly unusual when I saw that more than 40 briefs had been filed in South Dakota vs. Wayfair, Inc.where that state has asked SCOTUS to overturn Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which says that in order for a state to require sales tax collection, a vendor must have a non-trivial physical presence (i.e.“nexus”) in that jurisdiction.

A certain percentage of these briefs will support South Dakota, others will support Wayfair, and the remainder may support neither. However, in the spirit of Amicus, do all of these briefs “bring to the attention of the Court relevant matter not already brought to its attention by the parties?”

“It takes a lot to get tax practitioners passionate and riled, but this issue qualifies, and likely contributed to the large number of amicus briefs filed.”   

My personal observation is that many of these briefs, whether supporting either side, are put forth by groups, trade associations, individuals, states or politicians that have some sort of “investment” in the outcome. The sheer quantity of briefs in this instance caused me to wonder about the various competing interests in the outcome of the case.

The Players: South Dakota and Wayfair

Supporting South Dakota means throwing out more than 25 years of settled law (Quill).  Strict adherence to Quill enabled online retailers (sometimes referred to as “absentee retailers”) without nexus in a state such as Wayfair to sell product with no requirement to collect sales tax in the state.

As time went on, the percentage of retail sales by “absentee retailers” increased significantly, and states such as South Dakota sought methods of taxing these transactions. This led to state court fights in which some courts issued decisions clearly contrary to QuillWayfair is an online retailer that South Dakota wanted to tax even though Wayfair lacked nexus there. Wayfair prevailed in the lower courts, but South Dakota appealed to SCOTUS, advocating the overturn of Quill. Although the court has declined many other cases over the years related to this subject matter, it agreed to hear this case.

Who is rooting for South Dakota?

Little Rock, Arkansas, for starters. The capital city of Arkansas believes that it has been harmed by Quill’s “physical presence” requirement, because the estimated sales tax revenues barred by Quill could have paid for several public safety projects. Further, Little Rock suggests that it is burdened with duties created from internet sales by out-of-state companies to its residents. “The large economic impact of companies able virtually to enter a residence and bank account of a City citizen is a presence for which sales tax should be collected.” Clearly, Little Rock’s argument is one which can be appreciated by municipalities across the United States.

Lost revenue at the state and local levels seems to be a recurring theme among those who submitted amicus briefs in support of South Dakota. That list includes associations representing a plethora of “consumers” of municipal and local government services; the Multistate Tax Commission and Federation of Tax Commissioners; four United States senators (two Democrats and two Republicans, from North Dakota, Tennessee, Illinois and Wyoming); as well as 41 states, two United States territories, and the District of Columbia.

Interestingly, of the 46 U.S. jurisdictions (including D.C.) that do impose a sales tax, only Michigan, Missouri, South Carolina and West Virginia did not participate in an amicus brief filing. Among the five states that do not impose a sales tax, only Oregon participated in a brief in support of South Dakota.

Points other than the loss of state tax revenues that were addressed in briefs supporting South Dakota include unfair marketplace competition (e.g. brick and mortar retailers are disadvantaged by the low-cost, tax-free infrastructure created by online absentee retailers), the need to update tax law to fit the current economic environment, and the curtailing of discriminatory subsidies (again, absentee retailers) that lack any valid economic theory.

Who likes Wayfair?

It will be no surprise that other online retailers and their associations support the bright-line physical presence standard required by Quill. Whether selling jewelry on television, mail-order meat, cheese and fruitcakes, or an infinite variety of other products, the common refrain from online retailers is that the physical presence standard should be preserved.

In addition, various professional tax practitioners and “think tanks” submitted briefs supporting Wayfair for reasons ranging from concerns about retroactive application of a change in taxability to the cost and complexity of compliance if Quill were to be overturned. Such concerns about compliance included the costs of tax calculation, submission of payments to the states and the burden of audit defense, particularly as it applies to small business.

Two states that do not impose a sales tax: New Hampshire and Montana, came down on the side of Wayfair. New Hampshire suggested that should Quill be repealed, its residents would then be subjected to sales tax collection by remote states when they are not subject to tax from home state retailers. Montana cited the burdens placed upon its small and medium-sized businesses if they are required to collect tax on out-of-state sales.

The House Judiciary Committee submitted a brief supporting Wayfair, because it contends that it is responsible for overseeing legislation addressing state taxation of interstate commerce, and as such is working to “fashion legislation to support States in collecting sales and use taxes by making compliance simple and ensuring that each State’s tax and regulatory reach does not extend beyond its borders.”[1]  Senator Ted Cruz, generally known as a strict Constitutionalist, joined two other senators in support of Wayfair, under a similar rationale, citing the concern that “If states could tax spending on interstate online purchases, they would immediately take [unfair] advantage of this newfound power. This in turn would reduce incentives for a workable compromise and lead to states and cities engaging in the very sort of protectionist activities the Commerce Clause sought to prevent.”[2]

Who will prevail?

It is truly anybody’s guess as to how the Supreme Court will rule. After oral argument, commentators suggested that the effect on small business would be pivotal in the decision.  However, there are differing effects on small business that stem from the possible decisions.

On one hand, there is a school of thought that requiring tax collection on remote sales protects small brick and mortar business.  There is a contrary school of thought that requiring tax collection on remote sales places an undue burden on small business. Both viewpoints are arguably true, but there is little reliable evidence to evaluate their relative merits.

The Wayfair case record is particularly sparse on quantifiable facts that could assist SCOTUS in making its decision. Yet another possible outcome could be a remand of the case back to state court for additional findings of fact.

Regardless of the decision, this case should settle an issue that has been fermenting in the tax community for years. It takes a lot to get tax practitioners passionate and riled, but this issue qualifies, and likely contributed to the large number of amicus briefs filed.

The GAGNONtax team continues to closely follow the South Dakota v. Wayfair case, and will offer additional commentary and recommendations following the decision. In the meantime, we welcome the chance to speak with you and discuss how or if you should be preparing your business for a potential overruling of Quill.

GAGNONtax works closely with professionals nationwide to solve their tax challenges, using creative strategies and expertly-crafted technology. We have the expertise and experience of the Big Four, but not the layers of people and processes. Whether it’s through our tax consulting, tax compliance, or tax technology practices, we look at your specific challenges to find the perfect balance between risk and reward.

For more information, drop us a line at, call us at 617-451-0303 or visit

Related thought leadership from GAGNON: South Dakota v. Wayfair: Preparing for the Overruling of Quill

[1]Brief for House Judiciary Committee Chairman Bob Goodlatte; Senate Finance Committee Ranking Member Ron Wyden; Senators Maggie Hassan, Jeanne Shaheen, and Jon Tester; Representatives Steve Chabot, Ron DeSantis, Ann G. Eshoo, Jim Jordan, Ann McLane Kuster, Zoe Lofgren, Mark Meadows, Dana Rohrabacher, Kurt Schrader, and Jim Sensenbrenner as Amicus Curiae, p. 1, South Dakota vs. Wayfair, Inc.,, Inc., and Newegg, Inc.

[2]Brief for United States Senators Ted Cruz, Steve Daines, and Mike Lee as Amicus Curiae, p. 1, South Dakota vs. Wayfair, Inc., et al.



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Paul Naehle

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