In 1992, the U.S. Supreme Court held that in order to require a business to levy a particular state’s sales tax on consumers, that business must have a “physical presence” in the state in question. See, e.g., Michael J. Bologna, “State of Wayfair: Tax Groups to Hold Huddle on High Court Ruling(1),” Bloomberg. Jul. 30, 2018. In June, however, the Court redefined the situation, overturning the physical presence requirement and ruling that “states can legally collect tax[es] from remote retailers deemed to have [an] ‘economic nexus.”’ Maria Peroni, “What Does South Dakota v Wayfair Mean for Retailers?”, BTW, Jul. 31, 2018. This article examines the legal implications of the recent ruling for online retailers and states with respect to taxation.


Prior to this year and the Supreme Court’s holding in South Dakota v. Wayfair, a number of large online retailers did not charge consumers sales taxes. See, e.g., Tripp Baltz, “State of Wayfair: First Amazon Prime Day Since Ruling,” Bloomberg, Jul. 16, 2018. In the aftermath of Wayfair, “many states are expecting to reap millions more in tax revenue from certain online sales that, before the ruling, went uncollected. One of the bigger potential sources for tax payments will come from third-party sellers that market their goods and services on platforms such as Amazon.com…, eBay…, and Etsy.” Id. 

A number of parties are affected by the Court’s decision, from online businesses and third-party sellers to state governments. See, e.g., Michael J. Bologna, supra. Agencies that represent the states’ interests met with industry leaders in late July to discuss the Wayfair ruling and to clarify what kind of connection is adequate to necessitate retailers taxing their customers. See id. The proper way of enforcing Wayfair appears uncertain. Some states may pursue legislation to force increased taxation by businesses, but many groups representing e-commerce have requested that the Multistate Tax Commission (MTC) establish a working group to ensure that the states apply uniform rules to companies. See id.

The different approaches and concerns advanced by the parties with an interest in how Wayfair plays out may create legal conflicts. One attorney for the industries who would be subject to the new ruling has argued that October 1, 2018, which is one of the “dates targeted by many states as collection implementation deadlines,” is “too soon for companies to have time to research, purchase, and implement the tax compliance software necessary for collections.” Id. The U.S. House Judiciary Committee recently heard from retailers, and multiple complaints were made about the October deadline. See id. 

There are several scenarios in which the Supreme Court’s recent decision may involve expert witnesses and the legal community.

(1). State Legislation:  Many states are already planning on implementing their own legislation to enforce Wayfair. See, e.g., id.In the event that this occurs, experts in taxation, e-commerce, and policymaking may be valuable consultants to guide legislators who may draft new laws. If a state passes an individualized approach to enforce the recent holding, litigation may arise to challenge that action. In such an event, expert witnesses will be needed by both sides to help persuade judges and juries that a given state law comports with the Supreme Court’s intent.

(2). Federal Action: If the U.S. Congress decides to involve itself in the Supreme Court’s decision via legislation, expert assistance may be essential. Although the House Judiciary Committee heard some testimony from retailers and experts in e-commerce, other committees and the House and Senate floors may also require expert advisement to determine whether to act. If, in fact, members of Congress do wish to address the Wayfair ruling, they may wish to rely upon expert witnesses’ insight to best tailor policies to balance the interests of states, on the one hand, and businesses on the other. Should a legal challenge be mounted to potential legislation, consulting and testifying experts may be best equipped to resolve such matters to a court’s satisfaction.

(3). MTC Involvement: The Multistate Tax Commission (MTC) is an intergovernmental body comprised of a number of states that provides guidelines in an effort to promote uniformity in tax laws. See MTC, http://www.mtc.gov/Uniformity, no date given (last visited Aug. 15, 2018). Participation in the MTC is voluntary, and currently, almost every state and Washington, D.C. are members of the Commission’s Multistate Compact (MC). See MTC, http://www.mtc.gov/The-Commission/Member-States, no date given (last visited Aug. 15, 2018). However, different states participate in varying degrees, so there are several types of membership in the MC. See id. For example, some states have agreed to enact the MTC/MC policies into their laws, while others merely take part in Commission meetings. See id.Retailers have asked the MTC to assist in finding a uniform way of incorporating Wayfair into law. See Michael J. Bologna, supra. Experts can help inform the Commission on uniform taxation principles that adhere to the Court’s ruling. Because different states have opted for varied roles in the MTC/MC (or none at all, in Nevada’s case), litigation may ensue if Commission guidelines become legally binding by government agents. In such an event, experts will be able to help attorneys for both sides further their clients’ interests.


The Supreme Court made a sweeping change in South Dakota v. Wayfair, and many different entities are affected by its decision. To determine how to best enforce the Court’s ruling, policymakers, attorneys, and adjudicators may wish to rely on expert witnesses for invaluable information and guidance.