In South Dakota v. Wayfair et al., (585 U.S. ___, 2018) the Supreme Court of the United State has overturned a precedent previously established in Qill Corp. V. North Dakota (1992) which exempted art merchants from adding and collecting sales tax to any sales executed outside of their home state (under the Dormant Commerce Clause).

As a result of South Dakota, art dealers that sell outside of their state of residence are required to collect and pay the sales tax from wherever the sale has taken place (even if the tax was incurred following shipment, for example).

The court established that the rules holding dealers fiscally responsible in the state in which their goods are delivered, i.e. the destination state, are legitimate. The new rules also apply to telephone and Internet sales.

Prior to this ruling, Quill imposed sales tax liability only if the art merchant was physically present in the state in which the goods were being delivered. This precedent is now being overruled as it removed any incentive to establish a physical presence for businesses looking avoid tax burdens. The court stated that these behaviors were at the detriment of state tax agencies, leading to a loss of revenue worth between 8 and 33 billion dollars per year.

For these reasons, the judges in Quill have ruled that the sale of tangible goods and their delivery to citizens of South Dakota must be subject to a sales tax if: a) the amount of the gross value of sales of goods delivered within the State exceeds 100 thousand dollars; and b) more than 200 transactions per year have occurred in that state.

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