Question

explain why the case Quill Corp. vs North Dakota in 1992 has been so important to sales & use tax legislation.

Answer 1

In Quill Corp. v. North Dakota, the Supreme Court ruled that a business must have a physical presence in a state for that state to require the business to collect sales taxes. However, the Court explicitly stated that Congress can overrule the decision through legislation. There have been many attempts by politicians to change this decision through legislation. No bills have made it to law, however, because of the controversy surrounding this matter.

Amazon.com used this ruling to justify not charging sales tax on its online sales, which gave it a competitive advantage over retailers from 1995 until 2012, when pressure from states made Amazon collect sales tax in some of the states.

The soundness of the Quill decision has been questioned by legal scholars and judges in the twenty-first century as online sales have largely escaped taxation to the detriment of brick-and-mortar stores and state and local treasuries. In a related 2015 Supreme Court case Direct Marketing Ass'n v. Brohl, Justice Anthony Kennedy wrote in his concurrence that the Quill decision had a "tenuous nature", that there was "serious, continuing injustice faced by Colorado and many other States" of being able to collect sales taxes only from brick-and-mortar stores, and offered "it is unwise to delay any longer a reconsideration of the Court's holding in Quill". Kennedy's opinion suggested urgency for a case for the Supreme Court to review the Quill decision according to analysts. This led to several states to draft and purposely enact "kill Quill" laws to collect sales taxes for out-of-state purchases as to create the necessary legal vehicle to take to the Supreme Court. States which choose to collect sales taxes on online sales of retailers without a nexus often set minimum values and transactions, under which companies are not required to collect sales taxes