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AG Derek Schmidt: States should be able to collect sales and use tax from online retailers

Release Date: Nov 03, 2017

TOPEKA – (November 3, 2017) – A 25-year-old ruling that prevents states from collecting sales tax from online retailers unless the seller has a physical presence in the state was wrongly decided and should be reversed, Kansas Attorney General Derek Schmidt yesterday told the U.S. Supreme Court.

Schmidt and the attorneys general of 35 other states and the District of Columbia argue that the physical-presence rule gives online retailers an unfair competitive advantage over in-state brick and mortar stores. They are urging the Supreme Court to hear a new case from South Dakota and use it to overrule the 1992 Quill v. North Dakota decision that adopted the physical-presence rule.

“As the volume of internet-based retail transactions continues to compound daily, the physical-presence rule exacts an ever increasing toll on the States’ fiscal health,” the attorneys general wrote. “The States’ education systems, healthcare services and infrastructure are weakened as a result. … the [physical-presence] rule is contrary to the Constitution, it amounts to an illegal imposition on the legitimate power of the States, and it provides no justification to strip them of the most effective and sensible methods of sales and use tax collection. Removing those collection methods not only harms the States’ budgets but also the Founders’ constitutional design.”

The case is State of South Dakota v. Wayfair, Inc. A copy of the brief is available at http://bit.ly/2irmgCb.

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