Multistate – Should The US Supreme Court Abrogate Quill?

SALT Report 2108-2

On January 12, 2018, the US Supreme Court granted certiorari to the state of South Dakota (Wayfair v South Dakota) in their challenge against the longstanding (or barely standing) physical presence, sales and use tax standard set forth by the Quill decision in 1992. Having been presented with these types of cases in decades past the court has stopped short of overturning the physical presence standard choosing to ultimately “stand by that which is decided”.  After denying certiorari in 2013 in a similar challenge involving Amazon and New York the US Supreme Court is ready to deal with the cross border sales and use tax collection conundrum.

The text of their cert announcement follows:

 DECISION BELOW: 901 N.W.2d 754
 CERT. GRANTED 1/12/2018

In 1967, this Court held that the dormant commerce clause prohibits a State from
 requiring catalog retailers to collect sales taxes on sales into the State unless the retailer is
 "physically present" there. Nat'l Bellas Hess v. Dep't of Rev. of Ill., 386 U.S. 753 (1967).
 That rule, questionable even then, became an isolated outlier when Complete Auto Transit, Inc.
 v. Brady, 430 U.S. 274, 279 (1977), held that only a "substantial nexus" was needed for other
 state taxes affecting interstate commerce. In Quill Corp. v. North Dakota, 504 U.S. 298 (1992),
 this Court was asked to correct that aberration. But despite a vigorous dissent-and the lack of a
 similar, "physical presence" rule for any other type of tax, id. at 317-this Court tentatively
 retained the requirement on stare decisis grounds.

 The legal and practical developments of the past 25 years strongly recommend revisiting
 that judgment. Quill has grown only more doctrinally aberrant, and has been roundly criticized
 by members of this Court, including Justices Kennedy, Thomas, and Gorsuch. But while its legal
 rationales have imploded with experience, its practical impacts have exploded with the rapid
 growth of online commerce. Today, States' inability to effectively collect sales tax from internet
 sellers imposes crushing harm on state treasuries and brick-and-mortar retailers alike. "Given
 these changes ... , it is unwise to delay any longer a reconsideration of the Court's holding in
 Quill." Direct Mktg. Ass'n v. Brohl, 135 S. Ct. 1124, 1135 (2015) (Kennedy J., concurring).

The question presented is:
 Should this Court abrogate Quill's sales-tax-only, physical-presence requirement?


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