On June 12, 2017, Congressman Jim Sensenbrenner (R-WI) reintroduced into Congress H.R. 2887, also known as the “No Regulation Without Representation Act of 2017” (the “Legislation”), which codifies the physical presence nexus requirement established by the U.S. Supreme Court in Quill v. North Dakota, 504 U.S. 298 (1992) (“Quill”). The Legislation is interesting for several reasons: (1) it proposes to employ a result that is the exact opposite of the recent trend to overturn Quill; (2) it defines “tax” broadly to include net income and business activity taxes; and (3) it expands the law to require a physical presence for states to regulate a person’s activity in interstate commerce outside of the tax context.
We previously reported on the Massachusetts Department of Revenue’s Directive 17-1 (the “Directive”), setting forth the Department’s bright-line nexus threshold for internet vendors, effective July 1, 2017. Specifically, the Directive provides that an internet vendor with a principal place of business located outside of Massachusetts is required to register, collect and remit Massachusetts sales or use tax with respect to its Massachusetts sales if it: (1) had Massachusetts sales in excess of $500,000 during the…
On April 3, 2017, the Massachusetts Department of Revenue (the “Department”) issued Directive 17-1 (the “Directive”), setting forth the Department’s bright-line nexus threshold for internet vendors, effective July 1, 2017. Specifically, the Directive provides that an internet vendor with a principal place of business located outside of Massachusetts is required to register, collect and remit Massachusetts sales or use tax with respect to its Massachusetts sales if it: (1) had Massachusetts sales in excess of $500,000 during the preceding calendar year; and (2) made 100 or more sales for delivery into Massachusetts during the preceding calendar year. For the short period between July 1, 2017 and December 31, 2017, the Department will review whether these sales thresholds were met between July 1, 2016 and June 30, 2017.
Recently, the South Dakota Sixth Judicial Circuit Court granted Wayfair’s motion for summary judgment, finding South Dakota’s remote sales tax statute, S.B. 106, unconstitutional under Quill v. North Dakota, 504 U.S. 298 (1992). South Dakota v. Wayfair, Inc., S.D. Cir. Ct., No. 32 Civ. 16-000092 (Mar. 6, 2017) (“Wayfair”). The case appears to be headed directly to the South Dakota Supreme Court, assuming the state appeals. As a brief recap, S.B. 106 requires retailers to collect and remit sales tax if they have annual sales exceeding $100,000 or 200 separate transactions in the state, regardless of physical presence. See our prior coverage The Possible Upshot of South Dakota’s Master Plan to “Kill Quill”. The statute was purposefully designed to directly challenge the Quill physical presence standard. As of our last report on Wayfair, the defendants had the case removed to the U.S. District Court for the District of South Dakota. However, in January, the federal district court granted the state’s motion for remand to the South Dakota Sixth Judicial Circuit Court after determining that it lacked jurisdiction to hear the case. This was a victory for the state as S.B. 106 specifically provides for fast-track litigation through the state court system.