TEI files amicus brief on state taxation of mail-order sales.

Tax Executives Institute has filed a brief amicus curiae with the Supreme Court of the United States in Quill Corporation v. State of North Dakota (No. 91-194). The case involves the question whether a taxpayer with no physical presence in a state must nonetheless collect use tax with respect to its mail-order sales into that state. In Quill, the North Dakota Supreme Court held that the U.S. Supreme Court's decision in National Bellas Hess, Inc. v. Department of Revenue, 386 U.S. 753 (1967), was no longer viable and need not be followed. In October 1991, the U.S. Supreme Court agreed to review this direct challenge to National Bellas Hess. The Quill case will be decided in tandem with Wisconsin Department of Finance v. William Wrigley, Jr. Co. (No. 91-119), which involves an interpretation of Pub. L. No. 86-272 concerning the states' ability to tax income from mail-order sales. The Institute's brief, which is reprinted in this issue beginning on page 29, was prepared under the aegis of its State and Local Tax Committee, whose chair is Harry F. McKeon, Jr. of The Biltrite Corporation.

In its brief, the Institute expressed its concern about the scope and the implications of the lower court's decision in Quill. If not reversed, TEI predicted, "the decision would undercut the protections afforded taxpayers by the Commerce Clause, both because of the uncertainty it would spawn and because of the disproportionate costs it would impose." The Institute pointed out that the decis beyond the borders of North Dakota and far beyond the duty of a large mail-order business to collect sales. The decision "potentially affects the ability of all businesses -- no matter how small and no located -- to engage in interstate commerce without the imposition of undue burdens," TEI stated.

The Institute argued that the North Dakota court had ignored a basic principle of constitutional j is for the Supreme Court to prescribe constitutional standards and for the lower courts to adhere to "The decision below thus stands not only as a repudiation of the bright-line test set forth in Natio . . . but also as an affront to this Court's undeniable and necessary authority to establish governi constitutional jurisprudence and the Congress's rightful power to regulate commerce," TEI said. The suggested that if National Bellas Hess and the quarter century of its judicial progeny are to be ove Congress to decide." The decision of the North Dakota court should be reversed, TEI concluded.

TEI's brief in Quill was filed with the Supreme Court on November 20, and oral argument was held o A decision in the case is expected before the end of June.