New Interest in Empowering States to Tax Remote Sales

Under the Supreme Court’s 1992 decision in Quill v. North Dakota, a retailer is not required to collect sales taxes or use-taxes on sales to residents of a state in which the retailer has no physical presence. With the explosion in internet commerce since Quill was issued, states have faced significant losses from tax revenue. In response, states have enacted “click-through nexus” legislation and other bills that push the limits of Quill. Moreover, in a Supreme Court decision issued this spring, Justice Anthony Kennedy contended that Quill was based on tenuous reasoning, and that it’s “now inflicting extreme harm and unfairness on the States.” The states should find an appropriate case to allow the federal courts to reconsider Quill, he suggested.