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Nov 2, 2017
25-Year-Old Decision Costs States $26 Billion a Year

U.S. Senators Heidi Heitkamp (D-ND), Mike Enzi (R-WY), Dick Durbin (D-IL), and Lamar Alexander (R-TN), along with U.S. Representatives Kristi Noem (R-SD) and John Conyers, Jr. (D-MI), today submitted an amicus brief to the U.S. Supreme Court urging the Court to reconsider and overturn a 25 year-old case determining whether states can require out-of-state businesses like online vendors to collect and remit state sales and use taxes.


In 1991, when Heitkamp was North Dakota’s Tax Commissioner, the state of North Dakota attempted to make catalog retailers collect the sales and use tax the state and municipalities were already owed on sales. Heitkamp brought the case all the way to the Supreme Court, which in 1992 found in Quill Corp v. North Dakota that a business must have a physical presence in a state before it can be required to collect and remit state sales and use taxes. The Court also said that the U.S. Congress had the ultimate power to resolve the issue.


Since then, the sharp increase in internet sales has sparked renewed interest from state and local governments in leveling the playing field for brick-and-mortar businesses and closing a gaping loophole in our tax system. While the members have put forward a legislative solution in the Marketplace Fairness Act, Congress has not come to an agreement to fix the loophole.


“Small businesses in our states – and the workers who rely on them for jobs – have long been disadvantaged by out-of-state retailers and online vendors who aren’t required to collect sales and use taxes,” the members said. “When these retailers can charge lower prices, our small businesses and jobs are at risk. The Supreme Court should re-visit and reverse its decision in Quill that tipped the scales in favor of online retailers and against brick and mortar businesses around the country, which lose close to $26 billion every year because of a misguided decision over two decades ago. It’s past time to level the playing field for local shops across our communities.”  


Retailers without a physical presence have a price advantage over brick and mortar businesses of up to 8.5 percent in North Dakota, 9.75 percent in Tennessee, 11 percent in Illinois, and 6 percent in Wyoming simply because they cannot be required to collect those state taxes. 


Click here to read the full text of the amicus brief.


The amicus brief – also called a “friend of the court” brief that is filed by outside parties and is used to share additional information and arguments for the Court to consider – urges the Supreme Court to grant South Dakota’s request for the Court to consider South Dakota v Wayfair, Inc. This case seeks to overturn Quill, which prevents South Dakota and 44 other states from enforcing their own state sales and use tax laws. 


On April 27, Enzi, Durbin, Alexander, and Heitkamp introduced the Marketplace Fairness Act of 2017 – legislation that would give states the right to require out-of-state businesses or online retailers to collect and remit the sales and use taxes that are already owed under current law. In 2013, the Senate passed the Marketplace Fairness Act by a bipartisan vote of 69-27, but the legislation did not become law.


Noem and Conyers introduced similar legislation in the House of Representatives on April 27 — the Remote Transactions Parity Act – which has 49 bipartisan cosponsors and has been referred to the House Judiciary Committee.

115th Congress