Multistate Tax Update — April 7, 2016

May 26, 2016, marks the 24-year anniversary of the United States Supreme Court’s decision in Quill v. North Dakota that precluded states from requiring out-of-state retailers to collect and remit sales taxes on in-state sales. Quill does not prevent states from lodging a sales tax. But, it makes collecting such taxes difficult in the absence of a retailer’s meaningful physical presence in a state, known as nexus, because it forces jurisdictions to rely on consumers themselves to calculate and remit the necessary payments. With the relatively recent phenomenon of internet-based commerce and its explosive growth, millions of dollars of tax revenues have simply evaporated for lack of a collection mechanism. In addition, out-of-state sellers enjoy a significant competitive advantage over in-state sellers that are required to collect and remit sales taxes.