Quill Corp. v. North Dakota
| Quill Corp. v. North Dakota | ||||||
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 Supreme Court of the United States |
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| Argued January 22, 1992 Decided May 26, 1992 |
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| Full case name | Quill Corporation, Petitioner v. North Dakota by and through its Tax Commissioner, Heidi Heitkamp | |||||
| Citations | 504 U.S. 298 (more) 112 S. Ct. 1904; 119 L. Ed. 2d 91; 1992 U.S. LEXIS 3123; 60 U.S.L.W. 4423; 92 Cal. Daily Op. Service 4458; 92 Daily Journal DAR 7142; 6 Fla. L. Weekly Fed. S 269 |
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| Holding | ||||||
| The lack of a physical nexus in a state is sufficient grounds to exempt a corporation from having to pay sales and use taxes to a state. | ||||||
| Court membership | ||||||
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| Case opinions | ||||||
| Majority | Stevens, joined by unanimous (parts I, II, III); Rehnquist, Blackmun, O'Connor, Souter (part IV) | |||||
| Concurrence | Scalia, joined by Kennedy, Thomas | |||||
| Concur/dissent | White | |||||
Quill Corp. v. North Dakota, 504 U.S. 298 (1992) is a Supreme Court ruling concerning use tax. Quill Corporation is an office supply retailer. Quill had no physical presence in North Dakota (neither a sales force, nor a retail outlet),[1] but it had a licensed computer software program that some of its North Dakota customers used for checking Quill's current inventories and place orders directly. North Dakota attempted to impose a use tax on Quill, which was struck down by the Supreme Court.
Contents |
[edit] Background
The Tax Commissioner attempted to require Quill to collect and pay use tax on sales shipped into the state.[2] The North Dakota Supreme Court upheld the statute.
Quill, incorporated in Delaware, did not have a physical location in North Dakota. None of its workers were located there. Quill sold office equipment and stationery in North Dakota by using catalogues, flyers, advertisements in national periodicals, and telephone calls. Deliveries were made by post and common carrier from out-state-locations. [3]
[edit] Opinion of the court
North Dakota argued that under due process, Quill had established a presence, as the floppy disks were physically located in their state. The Supreme Court based its reasoning on analysis of the Commerce Clause rather than due process. [3]
The Commerce Clause gives the federal government power to regulate interstate commerce and prohibits certain state actions, such as applying duties, that interfere with trade among the states. In National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 US 753 (1967), it was held that a business whose only contacts with the taxing state are by mail or by common carrier lacks the "substantial nexus" required under the Dormant Commerce Clause. [3]
The court determined that Complete Auto Transit, Inc. v. Brady, 430 US 274 (1977), did not limit or undo the National Bellas Hess rule. A corporation, the court ruled, may have the minimum contacts required by the due process clause and still fall short of the substantial nexus required by the Dormant Commerce Cause. The court noted that the bright-line rule of National Bellas Hess "furthers the ends" of the Dormant Commerce Clause. The Quill court thus reversed the decision of the North Dakota Supreme Court requiring Quill to collect and remit sales taxes on purchases made by customers from that state.[3]
[edit] Effect on taxation of online sales
In Quill Corps. v. North Dakota, the Supreme Court ruled that a business must have a physical presence in a state for that state to require it to collect sales taxes. However, the court explicitly stated that Congress can overrule the decision through legislation.[1]
[edit] Congressional action
In 2011, Senators Dick Durbin (D-Illinois), Mike Enzi (R-Wyoming) and Lamar Alexander (R-Tennessee) introduced a bill that would overrule the decision and allow states to collect sales taxes on internet sales. The bill has wide support from brick-and-mortar retailers such as Walmart and Home Depot, and even online retailer Amazon has indicated support. EBay opposes the bill. States would be required to simplify their sales tax collection processes in order to collect tax from online retailers.[4]
[edit] See also
- Dormant Commerce Clause
- List of United States Supreme Court cases, volume 504
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court
- Streamlined Sales Tax Project
[edit] References
- ^ a b "QUILL CORP. v. HEITKAMP, 504 U.S. 298 (1992)". FindLaw. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=504&invol=298. Retrieved 2008-10-18.
- ^ "QUILL CORP. v. NORTH DAKOTA, BY AND THROUGH ITS TAX COMMISSIONER, HEITKAMP 504 U.S. 298". Justia. http://supreme.justia.com/us/504/298/. Retrieved 2008-10-18.
- ^ a b c d How the High Court Could Help Amazon, by Robert Willens, CFO Magazine, 31 January 2011
- ^ Declan McCullagh (November 9, 2011). "Internet sales tax: An idea whose time is now?". CBS News. http://www.cbsnews.com/8301-205_162-57321644/internet-sales-tax-an-idea-whose-time-is-now/. Retrieved November 9, 2011.
