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NSBA joins national orgs. in amicus brief supporting collection of sales tax

NSBA joined a large group of national organizations representing public officials and their attorneys in an amicus brief supporting the state of South Dakota’s attempt to collect sales tax from online retailers.

Under a 1992 Supreme Court decision, Quill Corp. v. North Dakota, 504 U.S. 298 (1992), states are prohibited from requiring an out-of-state business to collect sales tax on transactions with resident consumers unless the state can establish that the business has a physical presence in the state. As online retailing has exploded, this ruling has prevented states from collecting billions of dollars in revenue from e-commerce that could be used to support governmental services, including public education. 

The brief notes the devastating effect of the Quill restriction on States and local governments that heavily depend on sales tax revenues to remain solvent, and urges the Court to adopt a test for collection of sales tax that would focus on economic presence in a state, rather than physical presence.  The South Dakota legislation at issue in the case was designed as a direct response to Justice Kennedy’s invitation in another case for the Court to reexamine Quill.

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