Tennessee – TN Online Sales Rule Sparks Tennessee Lawsuit

Bloomburg BNA
By Andrew M. Ballard
April 5, 2017

Tennessee is the latest hotbed for litigation over the collection and remittance of sales taxes by large online retailers.

Washington-based NetChoice and the American Catalog Mailers Association filed a lawsuit in state chancery court March 30 after an administrative challenge to the state’s new nexus rule, finalized late last year, was rejected ( Am. Catalog Mailers Ass’n v. Tenn. Dep’t of Revenue , Tenn. Ch. Ct., No. 17-307-IV, complaint filed 3/30/17 ).

The groups say the rule ( Tenn. Code Ann. 1320-05-01-.129(2)) is unconstitutional because it contradicts precedent set by the U.S. Supreme Court’s 1992 ruling in Quill Corp. v North Dakota, 504 U.S. 298, which prohibits states from imposing sales and use tax collection obligations on vendors without an in-state physical presence.

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