Nat. Bellas Hess v. Dept. of Revenue

43 Analyses of this case by attorneys

  1. US Supreme Court Overturns Physical Presence Requirement in Landmark Decision

    McNair Law Firm, P.A.Jeffrey AllenJune 21, 2018

    The physical presence rule precludes a state from requiring an out-of-state seller to collect sales tax if the seller does not have a physical presence in the state. The physical presence rule was established by the Supreme Court in the cases of National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967) and Quill Corp. v. North Dakota, 504 U. S. 298 (1992). In a narrow 5-4 decision, the Supreme Court overruled Quill and Bellas Hess and found the physical presence rule was unsound and incorrect.

  2. Significant Changes To Illinois Nexus Rules effective October 1, 2018

    Akerman - SALT InsightsEmily FioreOctober 1, 2018

    Economic nexus was recently the subject of a U.S. Supreme Court case, South Dakota v. Wayfair, in which the Supreme Court ruled in favor of South Dakota stating that economic nexus could be Constitutional, overturning Quill Corp. v. North Dakota, 504 U. S. 298 (1992) and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753 (1967), which required businesses to have a physical presence in a taxing jurisdiction in order to create nexus for sales and use tax purposes. While the Supreme Court did not create a bright line rule or confirm that the South Dakota economic nexus statute was constitutional per se in Wayfair, it did positively discuss the law and indicated that if other states were to enact similar provisions, they would likely meet the substantial nexus requirements outline in the Commerce Clause.

  3. Narrowing the Gap for E-Commerce State Taxation: U.S. Supreme Court Strikes Down Physical Presence Rule

    Haight Brown & Bonesteel LLPSuzanne MulvihillSeptember 27, 2018

    Farewell To The Physical Presence Rule Upending 51 years of precedent, Wayfair overruled the Court’s physical presence rule as articulated in National Bellas Hess, Inc. v. Department of Revenue of State of Ill. (1967) 386 U.S. 753 and affirmed in Quill Corp. v. North Dakota (1992) 504 U.S. The physical presence rule prohibited states from requiring out-of-state retailers to collect and remit sales tax if the out-of-state retailer did not have a physical presence within the state. As such, the physical presence rule has long been the target of criticism for giving out-of-state businesses an advantage over in-state businesses and resulting in significant revenue losses to the states.

  4. A Janus-faced Standard? Chief Justice Roberts’s Approach to Stare Decisis at the Threshold of a Post-Justice Kennedy Supreme Court

    K&L Gates LLPRobert MitchellJuly 18, 2018

    South Dakota v. Wayfair Facing tax revenue shortfalls, South Dakota’s legislature in 2016 enacted emergency legislation requiring out-of-state retailers to collect and remit sales tax on sales to South Dakota residents, regardless of whether the seller had a physical presence in the state. This made the legislation invalid under the Supreme Court’s decisions in National Bellas Hess v. Illinois, 386 U.S. 753 (1967), and Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which held that, absent congressional authorization, states could not require remote sellers with no physical presence in the state to collect and remit taxes on sales to state residents. In an opinion written by Justice Kennedy, the Court in Wayfair overruled Quill and Bellas Hess.

  5. Massachusetts Lawyers Weekly publishes "'Wayfair': For small online retailers, future uncertain"

    Bowditch & DeweyJon BarooshianJuly 17, 2018

    History The 5-4 decision inWayfairoverruled the Supreme Court’s divisive 1992 rule inQuill Corp. v. North Dakota, which states have tried to “kill” for years through lawsuits and regulation. To understand the significance ofWayfair, it is necessary to understand some of the history leading up to it.National Bellas Hess InNational Bellas Hess v. Department of Revenue of Illinois, 386 U.S. 753 (1967), the Supreme Court ruled that a mail-order reseller was not required to collect sales tax unless it had some physical contact with the state. Located in Missouri, National Bellas Hess was a mail-order seller of various consumer products.

  6. Supreme Court Overturns Quill’s Physical Presence Rule in Wayfair

    Sidley Austin LLPJuly 2, 2018

    ShareOn June 21, the United States Supreme Court held, in South Dakota v. Wayfair, Inc., that a state may require an out-of-state seller with no physical presence in the state to collect and remit the state’s use tax. The Court described as “unsound and incorrect” the physical presence requirement it had established in National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967) and reaffirmed in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). Wayfair relied on three features of the South Dakota law that may very well serve as the basis for expedited legislative enactments in other states.

  7. Wayfair Decided – E-commerce Subject to Use Tax Collection

    Cozen O'ConnorDan SchulderJune 28, 2018

    The decision overturned more than 50 years of jurisprudence requiring retailers to have a physical presence in a state before they can be required to collect and remit any sales and use taxes on purchases. See National Bellas Hess v. Department of Revenue of Ill., 386 U.S. 753 (1967) and Quill Corp. v. North Dakota, 504 U.S. 298 (1992). Justice Kennedy wrote the opinion for the Court and was joined by Justices Thomas, Ginsburg, Alito, and Gorsuch.

  8. It’s Unanimous – All Nine U.S. Supreme Court Justices Agree that Quill Corp. v. North Dakota was Wrongly Decided, and Five Vote to Overrule It in South Dakota v. Wayfair, Inc.

    Squire Patton Boggs LLPMichael CullersJune 28, 2018

    The Court, by a 5 – 4 majority, held that a vendor need not have a physical presence in a state in order to have a “substantial nexus” with the state under the Commerce Clause that could obligate the vendor to collect sales or use taxes on sales made to customers who reside in the state and to remit those taxes to the state. Consequently, the Court overruled its prior holdings in National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967), and Quill Corp. v. North Dakota, 504 U.S. 298 (1992), that a vendor must have a physical presence in a state to be required to collect sales/use taxes on sales made to residents of that state.To learn what three things you should know about Wayfair and its effect on remote (read: Internet-based) vendors, read on after the jump.What did the Court do?The Court did not hold that the South Dakota law that imposes a sales/use tax collection and remission obligation on certain remote vendors satisfies each prong of the Commerce Clause analysis that applies to a state tax on interstate activity. The Court held that the physical presence requirement adopted by Bellas Hess and Quill for purposes of determining whether a remote vendor has substantial nexus with a state for purposes of sales/use tax collection and remission is no more.

  9. Supreme Court Overrules Quill, States May Require Vendors Without Physical Presence to Collect Sales Tax

    Ballard Spahr LLPWendi KotzenJune 27, 2018

    Although the Court's opinion in Wayfair clearly provides new opportunities for states to require out-of-state vendors to collect sales tax, the Court did not delineate a new standard for sales tax nexus, potentially opening up uncertainties in an area that has long had a black-and-white rule.Background In 1962, in National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), the Supreme Court, relying on the Due Process Clause of the Constitution, decided that a state could require only vendors with a physical presence in the state to collect sales tax from sales to customers in that state. Thirty years later, when given the opportunity to reconsider National Bellas Hess in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), the Court declined to do so and, relying on the Dormant Commerce Clause of the Constitution, again held that the vendor's physical presence in the state was necessary for that state to require the vendor to collect sales tax.

  10. Digital Economy: Supreme Court Overturns Physical Presence Requirement for State Sales Tax

    Proskauer - Tax TalksMartin HamiltonJune 27, 2018

    * * *The substantial assistance of summer law clerk Scott Tan in preparing this post is gratefully acknowledged by the authors. [1] National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967). [2] Quill Corp. v. North Dakota, 504 U.S. 298 (1992).