Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
By Ryan Prete
States’ taxing authority over remote retailers will change dramatically in the next 12 months, according to state tax practitioners.
“The nexus standard will change under a more aggressive interpretation of Quill,” Richard D. Pomp, the Alva P. Loiselle professor at the University of Connecticut School of Law, said July 28 during the Advanced State and Local Tax Institute at the Georgetown University Law Center. “I don’t like the frontal attacks on Quill, where states hope a petition will be granted and won on merit, but it’s what us lawyers do for a living. If you don’t like a precedent, you marginalize, trivialize, and set an agenda aside.”
Quill Corp. v. North Dakota is the U.S. Supreme Court’s 1992 decision that prohibits states from imposing sales and use tax collection obligations on vendors without a physical presence in-state. States have employed multiple measures to manage or overturn the 25-year-old restraint in an ever-expanding digital economy, and litigation is pending in South Dakota, Alabama, Tennessee, Indiana, and Wyoming.
Douglas Lindholm, president and executive director of the Council On State Taxation, said the force behind a changing nexus standard is states’ lost revenue to untaxed remote sales. He identified three options that could potentially solve the issue:
Lindholm said additional collaboration from one or two of the five largest states—California, Texas, Illinois, New York, and Florida—in the Streamlined Sales Tax Project would “revive the effort.” Those states aren’t member states.
Twenty-four states, representing more than 31 percent of the nation’s population, have adopted the simplification measures of the Streamlined Sales and Use Tax Agreement, which “aims to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance,” according to the Streamlined Sales Tax Governing Board.
“For those of you who are vested in the streamlined sales tax project, I commend you,” Lindholm said. “Keep at it. And to those of you in the five key states, let’s get on board here. There is a lot of money out there.”
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