Now that Quill has been overturned, what is next for sellers? The Court did not ultimately opine on the constitutionality of South Dakota’s law, but remanded the case for the state court to determine whether there were any other Commerce Clause concerns with South Dakota’s economic nexus law. However, the Court noted that the law contained several provisions that appeared to ensure that the law would pass constitutional muster and would not create undue burdens on sellers.
And while the litigation is not yet over in South Dakota, over a dozen states have already acted and have laws or regulations on their books similar to South Dakota’s law. The effective dates of these provisions vary by state. Certain states are currently prohibited from enforcing their economic nexus laws or have provisions stating that that the laws can be enforced prospectively only. As these provisions become effective and enforceable, which many will in the weeks and months to come, sellers will need to respond accordingly.
Checklist of next steps:
Step 1 – Review nexus footprint
Step 2 – Consider the overall business implications
Step 3 – Make taxability determinations
Step 4 – Review and consider technology needs
Step 5 – Filing compliance and initial registration