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Limitations on States' Jurisdiction to Impose Sales and Use Taxes (Portfolio 1420)

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AUTHORS


TABLE OF CONTENTS

Detailed Analysis

1420.01. INTRODUCTION

1420.02. CONSTITUTIONAL LIMITATIONS ON USE TAX COLLECTION BY OUT–OF–STATE SELLERS

A. Overview

B. General Limitations on State Jurisdiction to Tax: The Nexus Requirement

C. “Nexus” As Applied By The Courts: The Requirement of Physical Presence

1. Border Sales

2. Mail Order Solicitation Cases

a. Sears and Montgomery Ward

b. Bellas Hess

c. Quill Corporation v. North Dakota

3. Non–Sales or –Use Tax Nexus Cases

a. United States Supreme Court Decisions

b. State Court Decisions

1420.03. THE QUILL DECISION: REVISITING THE VITALITY OF BELLAS HESS

A. In General

B. Bellas Hess: Commerce Clause or Due Process Clause

C. “Economic” Nexus

1. The Bellas Hess Dissent

2. Adjudicative Jurisdiction Decisions

a. In General

b. U.S. Supreme Court Accepts States' Analogy to Adjudicative Jurisdiction

3. Other U.S. Supreme Court Decisions: Goldberg v. Sweet and D.H. Holmes Co. v. McNamara

4. D.H. Holmes Co. Trends - Use Tax on Catalogs

D. The Impact of Industry Changes on State Government

1420.04. LEGISLATIVE EFFORTS

Introductory Material

A. Historical Background: Federal Legislation Regarding State Jurisdiction to Tax

B. Pre–Quill Federal Legislative Efforts

C. Federal Legislative Efforts After Quill

D. The Fallacy of the “Fairness” Rationale

E. State Legislation

1. Anti–Bellas Hess Laws

a. Alabama

b. Arizona

c. Arkansas

d. California

e. Colorado

f. Connecticut

g. Florida

h. Georgia

i. Idaho

j. Illinois

k. Indiana

l. Iowa

m. Kansas

n. Kentucky

o. Louisiana

p. Massachusetts

q. Minnesota

r. Mississippi

s. Missouri

t. Nebraska

u. Nevada

v. New Mexico

w. New York

x. North Carolina

y. North Dakota

z. Ohio

aa. Oklahoma

bb. Rhode Island

cc. South Carolina

dd. South Dakota

ee. Tennessee

ff. Texas

gg. Utah

hh. Vermont

ii. Virginia

jj. Washington

kk. West Virginia

2. Other States

1420.05. PRE–QUILL STATE NEXUS CASES

Introductory Material

A. L.L. Bean Inc. v. Pennsylvania Department of Revenue

B. Bloomingdale's By Mail, Ltd. v. Pennsylvania Department of Revenue

C. District Photo Inc. v. California State Board of Equalization

D. Scholastic Book Clubs Inc. v. California State Board of Equalization

E. Cally Curtis Co. v. Groppo

F. SFA Folio Collections Inc. v. Bannon

G. Pearle Health Services Inc. v. Tennessee Commissioner of Revenue

H. Lands' End Inc. v. California State Board of Equalization

I. B. I. Moyle Associates Inc. v. Wisconsin Dept. of Revenue

J. Direct Marketing Association v. Bennett, et al.

K. L.L. Bean Inc. v. Bracey

1420.06. POST–QUILL DEVELOPMENTS: APPLICATION OF NEXUS PRINCIPLES IN STATE COURT

A. In General

B. Affiliate Nexus

1. Current Inc. v. California State Board of Equalization

2. G.P. Group Inc. v. Missouri Director of Revenue

3. The Country Shop Inc. v. Limbach

4. SFA Folio Collections Inc. v. Tracy

C. Use of In–State Agents or Representatives

1. In–State Employees

a. Carapace Inc. v. Limbach

b. Other Cases

2. In–State “Volunteers” and Unpaid Representatives

a. Educational Reading Service Book Fairs Inc. v. California Board of Equalization

b. In re Scholastic Book Clubs Inc.

c. Troll Book Clubs Inc. v. Pledger

d. Troll Book Clubs Inc. v. Tracy

e. Other Cases

D. Occasional or Sporadic In–State Presence

1. Cole Brothers Circus Inc. v. Huddleston

2. Matter of Orvis Company Inc.

3. Matter of Vermont Information Processing Inc.

4. Matter of NADA Services Corp.

5. Brown's Furniture Inc v. Wagner

6. Share International Inc. v. Florida Department of Revenue

7. Care Computer Systems Inc. v. Arizona Department of Revenue

8. Town Crier Inc. v. Illinois Department of Revenue

9. In re Intercard Inc.

E. Other “Substantial Nexus” Situations

1. Agents and Independent Contractors

2. Occasional Visits

3. Trade Show Nexus

4. Transactional Nexus

5. Voluntary Registration

6. Drop Shipments

7. Provision of In–State Warranty Services

8. Internet Sales and Electronic Commerce

1420.07. ATTORNEYS' FEES


WORKING PAPERS

Working Papers

Table of Worksheets

Worksheet 1 Quill Corp. v. North Dakota, 112 S. Ct. 1904 (1992)

Opinion

Worksheet 2 National Bellas Hess, Inc. v. Department of Revenue of the State of Illinois, 386 U.S. 753 (1967)

Opinion

Worksheet 3 Multistate Tax Commission Nexus Bulletin 95–1 Computer Company's Provision of In–State Repair Services Creates Nexus

Worksheet 4 2008 BNA Survey - Sales Tax Nexus

Bibliography

Bibliography