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

The Supreme Court has agreed to decide whether states can 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. South Dakota asked the Supreme Court to overturn Quill in South Dakota v. Wayfair. 

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 (SLLC) stated in its amicus brief in that case. Specifically, Internet sales have risen astronomically since 1992, and state and local governments are unable to collect most taxes due on those 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 was 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.   

It is possible (though not yet certain) the court will hear this case this term, meaning it would issue an opinion by the end of June 2018.   

The SLLC filed an amicus brief asking the court to hear this case, which was joined by ICMA and other organizations.