Supreme Court to Hear Case That Could Change Multi-State Sales Tax Law

UPDATE: The U.S. Supreme Court overturned Quill and allowed states to enforce “economic nexus” laws to compel out-of-state retailers to collect state sales taxes.  The Court’s decision is available here.  Our article here explains how states have responded to the Court’s decision. 

A very important case will be heard by the U.S. Supreme Court that could dramatically change the sales tax landscape.  This spring the Court will hear South Dakota v. Wayfair, Inc., which challenges a prior Supreme Court decision in Quill Corp. v. North Dakota

Quill held that a seller must have physical presence within a state (i.e. a brick-and-mortar store, office, warehouse, etc.) before the state can require it to collect and remit sales tax.  Quill has been a cornerstone of interstate sales for decades and has been relied on by countless businesses, especially online retailers.  If Quill is overturned, states could require online retailers to collect and remit sales tax, even without any physical presence in that state.  This would be a major change to the sales tax framework.  We are monitoring this case and will write about the holding when a decision is issued in June.

This article is provided for general information and is not intended to be legal advice for any specific situation.  If you are in need of specific advice or legal representation, please do not hesitate to contact us.

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