For 51 years, the physical presence rule has hampered states in collecting sales and use taxes from sellers with no property or personnel within state borders. The U.S. Supreme Court established this rule in 1967 in National Bellas Hess, Inc. v. Department of Revenue of the State of Illinois, based on the formalistic Due Process Clause and dormant Commerce Clause jurisprudence of that time, under which states had no authority to tax interstate commerce. However, in 1992, the Court upheld the physical presence rule under the dormant Commerce Clause in Quill Corporation v. North Dakota, notwithstanding dramatic changes in dormant Commerce Clause jurisprudence and the economy. On June 21, 2018, the Supreme Court rejected the physical presence rule in South Dakota v. Wayfair as anachronistic, unfair, and out of touch with the modern economy. This change will finally allow states to collect sales and use tax from remote sellers.
Keane, A.. 2018. From Bellas Hess to Wayfair: An Analysis of Supreme Court Jurisprudence on the Physical Presence Rule. The North American Accounting Studies 1 (1): 17-36.