Paul L. Caron

Tuesday, March 6, 2018

60 Tax Profs File Amicus Brief Urging Supreme Court To Overrule Quill v. North Dakota

Sixty tax law professors and economists filed an amicus brief at the Supreme Court Monday urging the Justices to overrule the Dormant Commerce Clause holding of Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which bars states from enforcing sales taxes against retailers who lack a "physical presence" in the state. From the brief:

In Quill Corp. v. North Dakota, the Court emphasized that its dormant Commerce Clause analysis was based on “structural concerns about the effect of state regulation on the national economy.” 504 U.S. 298, 312 (1992). The Court was especially concerned about the effect of taxation on the mail-order industry, and it believed that maintaining the physical presence rule would “foster[] investment by businesses and individuals.” Id. at 315-18. It also believed that its rule would reduce compliance costs for businesses and individuals engaged in commerce across state lines. See id. at 313 n.6. For those reasons, the Court reaffirmed the physical presence rule first announced in National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967).

The Court's decision in Quill was predicated on the competitive circumstances and economic understandings of its time. And in the quarter century since Quill, those circumstances and understandings have evolved. While the Quill Court was focused on the mail-order industry, it could not and did not foresee the meteoric rise of online retail, which has magnified the revenue losses that result from the physical presence rule. In the age of online retail, the physical presence rule has become a drag on economic efficiency and a potential impediment to investment across state lines. Meanwhile, the development of tax automation software over the past quarter century has led to a dramatic reduction in sales tax compliance costs for multistate retailers—so much so that overruling Quill would likely reduce aggregate compliance costs for individuals and firms seeking to abide by state tax laws. 

Thus, to overrule Quill now based on changed competitive circumstances and evolving economic understandings would be to take it on its “own terms.” See Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401, 2413 (2015). It would be to acknowledge that, regardless of whether Quill was rightly decided at the time, the factual assumptions upon which it was based do not apply to the Internet age. The Court should reverse the judgment below, eliminate the anachronistic physical presence rule for state sales tax collection, and update its dormant Commerce Clause jurisprudence to reflect a new technological and economic environment. 

The Supreme Court website has a full list of briefs filed so far in the case, South Dakota v. Wayfair, which involves a South Dakota statute that requires retailers who sell more than $100,000 of goods into the state to collect sales taxes from South Dakota residents. Other tax professors filing amicus briefs:

Prior TaxProf Blog coverage:

Ari Glogower, Daniel Hemel, David Gamage, David Herzig, Erin Scharff, New Cases, Orly Mazur, Sloan Speck, Tax Profs | Permalink


Michael, to Amazon, this would be a wonderful barrier to entry. They’re giddy, not amused.

Posted by: Johanna | Mar 8, 2018 3:45:44 PM


Posted by: Joshy | Mar 7, 2018 2:17:28 PM

Good arguments for change, I would add, however, that Amazon and Jeff Bezo are not amused.

Posted by: Michael W. Perry | Mar 7, 2018 11:47:56 AM