use tax

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 its predictable loss before the South Dakota Supreme Court, South Dakota is expected to ask the U.S. Supreme Court to rule that its law requiring out-of-state retailers to collect sales tax is constitutional. Doing so will require the U.S. Supreme Court to take the unusual step of overruling 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.

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.” A new challenge coming out of South Dakota might be just the case Justice Kennedy had in mind. 

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. 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 are unable to collect most taxes due on sales from out-of-state vendors.

The Tenth Circuit held that 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 constitutional.

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 use tax. To improve tax collection, in 2010 the Colorado legislature began requiring remote sellers to inform Colorado purchasers annually of their purchases and send the same information to the Colorado Department of Revenue. The Direct Marketing Association sued Colorado in federal court claiming the law was unconstitutional under Quill

If you know anything about the State and Local Legal Center (SLLC) you know that it files amicus briefs in U.S. Supreme Court cases affecting state and local government. The SLLC made an exception and filed an amicus brief in a federal circuit court of appeals case because of the importance of the issue to SLLC members.

In Direct Marketing Association v. Brohl the Tenth Circuit will decide whether Colorado’s 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. At least three other states have similar notice and reporting requirements (Oklahoma, South Dakota, and Vermont).