Baker McKenzie attended the U.S. Supreme Courtâs oral arguments yesterday in South Dakota v. Wayfair, Docket No. 17-494. At issue in the case is whether the Court should abrogate the physical presence nexus standard that it first articulated in National Bellas Hess v. Depât of Revenue, 386 U.S. 753 (1967), and later affirmed in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). The Courtâs decision could have a profound impact on sales and use tax nexus in the United States by altering the limitations currently imposed on a stateâs ability to require out-of-state retailers to collect such tax.
On June 12, 2017, Congressman Jim Sensenbrenner (R-WI) reintroduced into Congress H.R. 2887, also known as the âNo Regulation Without Representation Act of 2017â (the âLegislationâ), which codifies the physical presence nexus requirement established by the U.S. Supreme Court in Quill v. North Dakota, 504 U.S. 298 (1992) (âQuillâ). 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 âtaxâ 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 personâs activity in interstate commerce outside of the tax context.