State and Local Legal Center Asks Supreme Court to Accept Sales Tax Case

Possibly one step closer to the Supreme Court overturning Quill, meaning state and local governments will be able to force all sellers to collect sales tax.

BLOG POST | Nov 6, 2017

by Lisa Soronen, executive director, State And Local Legal Center 

The State and Local Legal Center (SLLC) has filed an amicus brief asking the Supreme Court to agree to hear South Dakota’s petition in South Dakota v. Wayfair. In this case, South Dakota is asking the Supreme Court to hold that states may require 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 that SLLC stated in its amicus brief in the case. Specifically, Internet sales have risen astronomically since 1992, and state and local governments are unable to collect most taxes due on sales from out-of-state vendors.

Following the Kennedy opinion, a number of state legislatures passed laws requiring remote vendors to collect sales tax. South Dakota’s law is the first to be ready for review by the Supreme Court. In September 2017, South Dakota’s highest state court ruled that the South Dakota law is unconstitutional because it clearly violates Quill, and it is up to the Supreme Court to overrule it. In October, South Dakota filed a certiorari petition asking the Supreme Court to hear its case and overrule Quill.   

The SLLC amicus brief makes two main points. First, it explains why this is the right case for the Court to take. In recent years, numerous cases (and state laws) have challenged Quill at the margins. This case directly asks the Court to decide whether to overturn Quill without any distractions like factual issues. Second, now is the right time for the Court to consider overturning Quill because state and local governments are failing to collect billions of dollars in tax revenue annually at an increasing rate due to rising online sales.

The brief cites a study by the National Conference of State Legislatures and the International Council of Shopping Centers, which estimated that in 2015 uncollected sales taxes from remote sales were almost $26 billion. Of this $26 billion, more than $17 billion uncollected taxes were projected to be from electronic sales.    

At this point, all South Dakota and its amici, including the SLLC, are asking the Supreme Court to do is agree to hear this case. Supreme Court review is discretionary; four of the nine Supreme Court justices must agree to hear any case. If the Supreme Court refuses to do so, the South Dakota Supreme Court ruling that South Dakota’s law is unconstitutional will stay in place. 

It is possible the Court could hear this case this term, meaning it would issue an opinion by the end of June 2018.   

Tillman Breckenridge, Bailey & Glasser, wrote the SLLC amicus brief that these organizations joined: National Governors Association, National Conference of State LegislaturesCouncil of State GovernmentsNational Association of Counties, National League of Cities, United States Conference of MayorsInternational City/County Management Association, International Municipal Lawyers Association, Government Finance Officers Association, International Public Management Association for Human Resources, National School Boards Association, National AASA: The School Superintendents Association, and the National Association of Elementary School Principals.


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