Quill Corp v. North Dakota
Quill Corp. v. North Dakota is the basis for current sales tax collection.
The case resulted from an attempt by North Dakota seeking to collect sales tax on licensed computer software offered by the Quill Corporation, an office supply retailer with no North Dakota presence, that allowed users to place orders directly with Quill.
In Quill Corp. v. North Dakota, the Supreme Court ruled that a business must have a physical presence in a state for that state to require it to collect sales taxes. However, the Court explicitly stated that Congress can overrule the decision through legislation.
South Dakota passed Senate Bill 106 in March 2017 with the intent of collecting sales tax from out-of-state vendors. The law established various safeguards for vendors, and only required those with sales of over US$100,000 or with more than 200 different transactions to residents in the state to collect taxes.
This was one of the first so-called "kill Quill" bills, purposely made to challenge the Quill ruling. By April 2017, at least twenty other states had pending or enacted similar legislation designed to challenge Quill, and as of January 2018, 34 states have filed briefs with the Supreme Court in support of South Dakota.