Quill Tag

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Posted 21 Jun 2018 in Case Notes, Commentary, IMLA Briefs
In South Dakota v. Wayfair the Supreme Court ruled that states and local governments can require vendors with no physical presence in the state to collect sales tax. According to the Court, in a 5-4 decision, “economic and virtual contacts” are enough to create a “substantial nexus” with the state allowing the state to require collection. In 1967 in National Bellas Hess  v. Department of Revenue of Illinois, the Supreme Court held that per its Commerce Clause jurisprudence, states and local governments cannot require businesses to collect sales tax unless the business has a physical presence in the state. Twenty-five years later in Quill v. North Dakota (1992), the Supreme Court reaffirmed the physical presence requirement but admitted that “contemporary Commerce Clause jurisprudence might not dictate the same result” as the Court had reached in Bellas Hess. Customers buying from remote sellers still owe sales tax but they rarely pay it when the remote seller does not collect it. Congress had the authority to overrule Bellas Hess and Quill, but never did so.

Posted 17 Apr 2018 in Case Notes, Commentary

In South Dakota v. Wayfair South Dakota is asking the Supreme Court to overrule precedent and hold that state and local governments may require retailers with no in-state physical presence to collect sales tax. The National Conference of State Legislatures estimated that states lost $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases. In 1967 in National Bellas Hess  v. Department of Revenue of Illinois, the Supreme Court held that per its Commerce Clause...

Posted 09 Oct 2017 in Case Notes, Commentary, IMLA Briefs, Monday Morning Review
South Dakota has filed a petition in South Dakota v. Wayfair asking the U.S. Supreme Court to hear a challenge to its law requiring out-of-state retailers to collect sales tax. In Quill Corp. v. North Dakota (1992), the Supreme Court held that states cannot require retailers with no in-state physical presence to collect sales tax. In March 2015, Justice Kennedy wrote a concurring opinion stating that the “legal system should find an appropriate case for this Court to reexamine Quill.” Justice Kennedy criticized Quill in Direct Marketing Association v. Brohl for many of the same reasons the State and Local Legal Center stated in its amicus brief. Specifically, internet sales have risen astronomically since 1992 and states and local governments are unable to collect most taxes due on sales from out-of-state vendors. Following the Kennedy opinion a number of state legislatures passed legislation requiring remote vendors to collect sales tax. South Dakota’s law is the first to be ready for review by the U.S. Supreme Court. In September the South Dakota Supreme Court ruled that the South Dakota law is unconstitutional because it clearly violates Quill and it is up to the U.S. Supreme Court to overrule it. 

Posted 22 Mar 2017 in Commentary
Confirmation hearings generally follow a predictable course; Judge Gorsuch’s hearings have been no exception. Senators from the other side of the aisle as the President ask the nominee pointed questions on controversial topics which the nominee does his or her best to politely avoid answering. As a result, many issues of interest to states and local governments receive little meaningful attention. While a friendly Senator (Flake, R-AZ) asked Judge Gorsuch whether a particular case he ruled in was consistent with the “principle of states as laboratories of democracy” and another friendly Senator (Crapo, R-ID) asked Judge Gorsuch to discuss the Tenth Amendment, federalism was rarely discussed as such and preemption wasn’t discussed at all. Likewise, many of the issues of particular importance to local governments—qualified immunity and property rights—also were not discussed. Judge Gorsuch did say

Posted 09 Mar 2017 in Case Notes, Commentary
In  S. Dakota v. Wayfair, Inc., 2017 U.S. Dist. LEXIS 7669, a state trial court judge in South Dakota has ruled that a South Dakota law requiring remote sellers to collect sales tax is unconstitutional. This ruling was expected for precisely the reason the judge stated—a lower court must follow Supreme Court precedent.    In Quill Corp. v. North Dakota, decided in 1992, the Supreme Court held that states cannot require retailers with no in-state physical presence to collect sales tax. The South Dakota law directly contradicts this precedent.

Posted 13 Dec 2016 in Case Notes, IMLA Briefs
The Supreme Court refused to hear a case involving the question of whether a Colorado law requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue is unconstitutional. As is always the case, the Supreme Court gave no reason for denying the petition. In Quill Corp. v. North Dakota, decided in 1992, the Supreme Court held that states cannot require retailers with no in-state physical presence to collect sales tax. In 2010 the Colorado legislature passed the law described above to improve sales tax collection. The Direct Marketing Association sued Colorado claiming the law unconstitutionally discriminates against interstate commerce and is unconstitutional under Quill.   

Posted 22 Nov 2016 in Case Notes, Commentary, IMLA Briefs
In Crutchfield v. Testa the Ohio Supreme Court held that Ohio’s commercial activity tax (CAT) applies to online vendors even if they lack a physical presence in the state. More technically, the court refused to extend the U.S. Supreme Court’s holding in Quill Corp. v. North Dakota (1992), that states cannot require retailers with no in-state physical presence to collect sales tax, to Ohio’s privilege-of-doing-business tax. The State and Local Legal Center (SLLC) filed an amicus brief arguing in favor of this result.