Retailers have taken note of the dramatic shift in state sales tax law emerging from one of Justice Anthony Kennedy’s last Supreme Court decisions. As different states announce legislative and regulatory changes throughout the summer, retailers are scrambling and we’re now seeing the impact in venture capital, private equity, and merger and acquisition transactions involving commerce companies.

On June 21, 2018 the U.S. Supreme Court decided South Dakota v. Wayfair, Inc. , in which it upheld a South Dakota law that requires certain sellers to collect sales tax even if those sellers lack “physical presence” in the State. The South Dakota law challenged prior Supreme Court precedent because it required a minimum annual amount of sales to South Dakota customers rather than requiring a seller’s physical presence in South Dakota. As a result, the Supreme Court’s decision reverses longstanding precedent and has sweeping repercussions for online sales and old style mail order sales. In the two months following the Wayfair decision, numerous States have been reacting, including enacting legislation very similar to South Dakota's, and they’re doing so with an eye toward enhancing their collections of sales tax revenues. Consumers will pay and retailers, especially but not solely, online retailers, are concerned that the Wayfair case will adversely impact sales and/or price.

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