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ILN Today Post

States’ online tax laws continue to prompt lawsuits

There is no end in sight for legal challenges to state government efforts to tax remote sales. The latest involves a lawsuit that Bloomberg made available online, filed by NetChoice and the American Catalog Mailers Association. They say that a new Tennessee administrative rule violates the precedent established in the now familiar 1992 U.S. Supreme Court case, Quill Corp. v North Dakota, which made it unconstitutional for states to impose a use tax collection duty on out of state sellers with no physical presence in that jurisdiction.

The new administrative rule that the suit is premised on contains a nexus provision calling for “[o]ut-of-state dealers who engage in the regular or systematic solicitation of consumers in this state through any means,” with sales to in-state consumers of more than $500,000, to register with the Department, and collect the applicable sales and use taxes on those sales.

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