No! Overturning Quill Corporation v North Dakota, 504 U.S. 298 (1992) would mean retailers throughout the United States would have to collect, report and remit sales tax for all other states with a sales tax even if the retailer has no physical presence in the other states.

The Direct Marketing Association (“DMA”) petitioned (Docket 16-267) the U.S. Supreme Court to review the judgment of the United States Court of Appeals, Tenth Circuit which overturned a decision in favor of the DMA.

The Colorado Department of Revenue (“DOR”) submitted a conditional cross-petition asking, “Should Quill be overturned?”.

In its petition, the DMA addresses multiple reasons the Supreme Court should hear the case, but the one I want to focus on is this:

Does the Colorado DOR have nondiscriminatory alternatives to prevent the harm from loss of revenues from out-of-state sellers’ internet sales? My answer is, “Yes!”

I’ve been to multiple Colorado State Chamber of Commerce and Industry (CACI) meetings where State legislators and in particular, top DOR representatives were guest speakers. I’ve personally brought up the DOR’s efforts to force out-of-state sellers to notify their customers about Colorado use tax and to report their customers’ names, addresses and purchase amounts to the DOR. I’ve pointed out that the DOR wants the sellers to notify customers about use tax, but the DOR still hides “Use Tax” on its own Revenue Online return filing web portal.

Businesses come to the website and login to their DOR accounts. They see information about returns due such as sales tax, withholding and income tax, but NOTHING about Use Tax. Use tax isn’t tied to their account at all. It’s on the main page under Quick Links, File A Return. So the DOR fails to help businesses that login to take care of their returns see that a Use Tax return may be due.

Use tax is already heavily audited, yet many businesses are unaware of it and their obligation to self-assess and remit it. A simple change from the DOR would promote awareness and increase compliance.

Did they listen? No. They heard and acknowledged my comments, but as of today, the website is unchanged. Use Tax is still hidden under “File A Return”. Meanwhile, auditors continue to make big assessments for the tax, interest and penalties.

Technology is purported to be the magic pill for the Streamline Sales Tax Agreement members and more recently under Congressional legislation introduced in multiple years as the “Market Place Fairness Act”.

Should Quill be overturned such that no physical presence standard is required? Absolutely not now! State and local jurisdictions’ tax codes are not simplified at this point, technology doesn’t solve it all and Colorado and other states have a long-way to go on educating business on what is and isn’t taxable.

Alan Smith
Sales Tax Colorado, LLC
www.salestaxcolorado.com