Business owners would tend to agree that money taxed is better than no money at all. From there, tax attorneys do what they can to minimize their client’s tax burden. South Dakota v. Wayfair, Inc. significantly strengthens states’ authority to collect tax on online sales from businesses that have no physical presence in the state. Etsy, eBay, and similar companies have created an environment that allows individuals to sell items directly to buyers via the internet, so this decision is of particular interest to those who sell items through e-commerce.
The right for states to tax out-of-state businesses has been adjudicated several times dating back to 1954. In Complete Auto Transit v. Brady, the Court created a four-prong test that, if satisfied, would determine a state tax of out-of-state businesses not in violation of the Commerce Clause. Twenty-five years later, the Court again reviewed the issue in Quill Corp. v. North Dakota based on North Dakota taxing a mail-order business that did not have a physical presence in the state. The Court decided that for a tax to satisfy the substantial nexus requirement of the Complete Auto test, the company must have a physical presence in the state. Coincidentally, the Supreme Court of North Dakota had ruled in favor of the tax because of the “tremendous social, economic, commercial, and legal innovations” that had developed since that ruling, and the Supreme Court stated that this was logically sound in its opinion even though the decision was reversed. The Supreme Court granted certiorari in Wayfair to revisit the issue for similar reasons.
The Supreme Court’s ruling in South Dakota v. Wayfair, Inc. changed the requirements for states to collect sales tax from remote, online sales. In 2016, South Dakota passed a law that requires companies without a physical presence in the state to collect and pay sales tax to the state. As soon as this statute passed, South Dakota notified Wayfair, Inc., Overstock.com, and Newegg Inc. of their taxable status and immediately filed a declaratory judgment action to determine the statute’s validity. After the South Dakota Supreme Court upheld the lower court’s decision to grant summary judgment to Wayfair, Inc., on the grounds that the statute was unconstitutional, the Supreme Court granted certiorari. The Court categorically revoked the Quill and National Bellas Hess precedent, holding that the physical presence standard established in in these cases is ill-fated in our e-commerce economy.
Fortunately, built into the statute is a clause that should ease the tension of Etsy and eBay hobbyist sellers. The statute necessitates that for the tax to be applied, the business must conduct two hundred separate transactions or accumulate $100,000 or more in sales within a one year period in the state. The Supreme Court fixated on this in Wayfair, Inc., offering that states should establish some threshold to prevent the over-taxation of small companies that would only provide de minimus funds to the state and be a hefty burden to the businesses. To benefit the states that had fallen victim to the loophole created by e-commerce, the Court opined that the transaction requirements in this statute are satisfactory to replace the physical presence requirement in Complete Auto.
Therefore, if the company does not conduct two hundred separate transactions or accumulate $100,000 or more in sales annually, the state will not require taxes be paid from businesses without a physical presence within the state, which is good news for the great majority of small businesses and Etsy entrepreneurs. The worrying part of this new standard set by the judiciary is whether states can erode the set transaction and dollar amount until it does affect the great majority of small, online businesses. Several states have already passed legislation similar to the South Dakota bill to begin within the next few months as a result of the Wayfair, Inc. decision. Congress will need to act with haste to prevent states from pushing the imminent harm onto small-business owners.
 Victor Fleischer, Regulatory Arbitrage, 89 Tex. L. Rev. 227, 229 (2010) (discussing the act of regulatory arbitrage, defining such as “a perfectly legal planning technique used to avoid taxes, accounting rules, securities disclosure, and other regulatory costs.”).
 See South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2088 (2018) (concluding that out-of-state e-commerce taxation does not violate the Commerce Clause).
 See, e.g., Quill Corp. v. North Dakota, 504 U.S. 298, 312 (1992); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977); Miller Bros. v. Maryland, 347 U.S. 340, 340 (1954) (holding that general delivery of goods and advertising in state are not enough to impose state taxation).
 See Complete Auto, 430 U.S. at 279 (noting that (1) the tax is applied to an activity with a substantial nexus with the taxing State, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to the services provided by the State).
 Quill Corp., 504 U.S. at 301.
 See id. at 304 (thwarting North Dakota’s argument that “minimum contacts” analysis under the Due Process Clause and “substantial nexus” analysis under the Commerce Clause are one in the same and would be satisfied by doing business without a physical presence in the state); see also National Bellas Hess v. Dep’t of Revenue, 386 U.S. 753, 759 (1967) (noting that the Commerce Clause was developed to keep interstate commerce free from local issues).
 Id. at 301.
 See South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2088 (2018) (noting that the physical presence rule in Quill is “unsound and incorrect”).
 See id. at 2085, 2099 (overruling Quill and National Bellas Hess that had declared the practice unconstitutional based on the Commerce Clause).
 See id. at 2089 (identifying the parties in the suit, none of which have employees or property in the state, and noting the statute’s authority was stayed until courts determined the constitutionality of the statute).
 See Wayfair, 138 S. Ct. at 2088, 2096 (noting that the state’s loss from the inability to collect taxes on remote transactions, an estimated figure between $8 and 33 billion, was crippling states and placing them in imminent harm); see also Quill Corp. v. North Dakota, 504 U.S. 298, 312 (1992) (establishing the “nexus” requirement in Complete Auto was met with physical presence in the state, not simply sales within the state).
 South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2089 (2018).
 See id. at 2099 (applying the Complete Auto test, which requires a “substantial nexus” with the taxing state that the Court declared is satisfied by the number of transactions and dollar amount set within the statute).
 Id. (interpreting the meaning of “substantial nexus” after overruling Quill and National Bellas Hess).
 Id. (“This quantity of business could not have occurred unless the seller availed itself of the substantial privilege of carrying on business in South Dakota. And respondents are large, national companies that undoubtedly maintain an extensive virtual presence.”).
 See E. Kendrick Smith, Michael Wynne & Douglas A. Wick, Chaos Ahead for Remote Sellers, Law360 (July 20, 2018), https://www.law360.com/articles/1065361/chaos-ahead-for-remote-sellers (discussing the potential harms not discussed by the Court in its opinion).
 See Gerald J. Donnini II, Reasonable Answer Done the Wrong Way: Supreme Court Overturns Quill in South Dakota v. Wayfair, Inc., 92 Fla. Bar J. 82 (2018) (noting that approximately twenty states have enacted legislation, including Alabama, Iowa, and Washington).