CLBR #311: Matthew Schaefer on Online Sales Taxes After Wayfair

Matthew Schaefer, our friend from Maine, returns to CLBR to discuss the recent Supreme Court’s decision in South Dakota v Wayfair that reversed a prior ruling that effectively prevented online sales taxes for out of state merchants.   Matthew was co-counsel in the Wayfair case.


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The Road to Wayfair

1992:  Quill Corp. v. North Dakota, 504 U. S. 298 (1992)
Adopts a bright-line rule that a state may not tax out of state retailers without a physical presence in the state.

2008: New York passes “Amazon” or “Affiliate Nexus Tax”
Move launches Amazon Tax Wars as other states follow suit.

2013: New York court upholds Amazon Tax, Supreme Court denies the petition for cert.

2015: Direct Marketing Association v. Brohl, 135 S.Ct. 1124 (2015)
Justice Kennedy’s concurrence states “it is unwise to delay any longer a reconsideration of the Court’s holding in Quill.. . . The legal system should find an appropriate case for this Court to reexamine Quill”.

2018: South Dakota v. Wayfair, 135 S.Ct. 2080 (2018)
Justice Kennedy writes 5-4 opinion overturning Quill.

The Commerce Clause must not prefer interstate commerce only to the point where a merchant physically crosses state borders. Rejecting the physical presence rule is necessary to ensure that artificial competitive advantages are not created by this Court’s precedents.

Roberts dissent:

E-commerce has grown into a significant and vibrant part of our national economy against the backdrop of established rules, including the physical-presence rule. Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress. The Court should not act on this important question of current economic policy, solely to expiate a mistake it made over 50 years ago.

btfitz_20131105_1068_MMatthew P. Schaefer
Brann & Isaacson


Matthew Schaefer, a Partner at the law firm Brann & Isaacson, has focused for nearly 20 years on state tax matters and contested proceedings before courts and administrative tribunals.  He was co-counsel before the U.S. Supreme Court for the Respondents in South Dakota v. Wayfair Inc., 135 S.Ct. 2080 (2018) and for the Petitioner in Direct Marketing Association v. Brohl, 135 S.Ct. 1124 (2015).  Matthew advises numerous e-commerce vendors, multi-channel merchants, and trade associations, and has represented the challengers in nearly every leading court case testing the constitutionality of state “economic presence” laws that impose burdensome tax and regulatory obligations on remote sellers.

Matt is a co-author of ‘Eyes on eCom Law,’ a blog that reports on legal developments of interest to direct marketers and online sellers.

Brann & Isaacson is unique among its peers—a boutique law firm grounded in Maine that represents over 100 large and small online and multichannel companies across the country. The firm is general counsel to L.L. Bean, one of the most prominent and admired retailers in the industry. Today, we advise many of the companies in the Internet Retailer’s Top 500 Guide, as well as many small companies that hope someday to be included in that list.

Brann & Isaacson is based in Lewiston, Maine which is approx. 40 miles north of Portland and 135 miles north of Boston.  It was in Lewiston where Muhammad Ali had his first title defense, knocking out Sonny Liston in the infamous phantom knockout.





September 19 – Terry Fox Run

More information at the Terry Fox Foundation.