Amazon, "Kill Quill," and the Two Bills Commentary
Amazon, "Kill Quill," and the Two Bills
Edited by: Dave Rodkey

JURIST Guest Columnist Matt Belenky of the University of Pittsburgh School of Law discusses Amazon’s sales tax policy… As of April 1, 2017, Amazon, once a leader in pushing for online purchases to be tax free, announced it would collect sales taxes on purchases in the final four states it hadn’t yet collected from: Hawaii, Idaho, Maine, and New Mexico. Delaware, Montana, New Hampshire, and Oregon include states that have no sales tax at all, while Alaska only has a municipal sales tax where individual municipalities have power to set their own taxation rates. Amazon’s move to offer more expedient delivery services has come with an expansion of its distribution centers throughout the United States. Hence, Amazon’s interest in collecting sales taxes from states where its distribution centers, that help offer same day or next day delivery, are located. In an attempt to get sellers to pay a sales tax, many states across the United States are now involved with enacting legislation, in what’s known as the “kill Quill” movement. Referring to the 1992 Quill v. North Dakota case, sellers would be required to pay a sales tax once their sales in the state reach a certain value. In addition, in late May, Sen. Tim Kaine (Va.) reintroduced a bill, the Marketplace Fairness Act [PDF], which would allow states to tax across their borders and businesses would become tax collectors indebted to the states. This bill could cut pricey compliance requirements for businesses while allowing the states to collect taxes from online consumers.

Amazon and Quill

Amazon’s sales tax has long been a topic of conversation. In 2016, researchers at Ohio State studied household spending data in 19 states in which the sales tax was in effect and found that shoppers spent 8.3% less on products after the tax was put into effect. The biggest decline came from big-ticket items (e.g. $250 or higher) where sales declined by 11.4%. States have had varying relationships with Amazon over the years. In South Carolina, for example, the state legislature gave Amazon a break on their sales tax collection in exchange for creating jobs for the states’ citizens. This break was going on despite the fact that Amazon had a huge fulfillment center in South Carolina, which would be sufficient enough to grant them nexus to the state. In addition, New Mexico expects to collect tens of millions of dollars in revenues generated by Amazon’s collections in the state. The money will be distributed among the state’s general fund and to the cities where the item was bought. According to the National Conference of State Legislatures, the physical nexus tax loophole cost states $17.2 billion in 2016.

There has also been a long history of retailers opposing tax laws that would allow Amazon and other online companies to avoid charging customers, depending on the state, a sales tax on their purchases. Before Amazon even existed, the ruling that companies are only allowed to collect sales tax if they have a physical location in the states comes from a 1992 case–Quill Corp v. North Dakota. Hence, the lack of a physical nexus in a state is sufficient to exempt a corporation from having to pay sales taxes to that state. This may explain Amazon’s desire to expand its distribution center outreach to every possible state that it can collect sales taxes from. In 2015, Supreme Court Justice Kennedy stated that changes in technology and consumer sophistication warrant a reversal of Quill, since a “business may be present in a State in a meaningful way, without that presence being physical in the traditional sense of the term.” Justice Kennedy is correct in saying that technology now is far more advanced and complex than it was in 1992 and reversing Quill based on the current e-commerce structure holds merit. The Internet was in its infancy and corporations made little to no revenues off of their online businesses. For present day corporations involved in the retail space, however, the exact opposite is true. Online business is king. In March 2017, a group of online retailers sued South Dakota for a March 2016 law that was passed requiring all online stores with sales in the state of more than $100,000 or 200 separate transactions to collect sales taxes. The issue is now before the South Dakota Supreme Court, and the next step would be the Supreme Court. Alabama, Tennessee and South Dakota are the three states currently involved in litigation battles over similar economic nexus related issues. These three states have responded to changes in the digital marketplace as part of “kill Quill” movement, and 20 more states are expected to join them through statute or administrative rule in 2017.

Federal Solutions to Amazon

Contrary to President Trump’s July 24th tweet stating that Amazon is a “no-tax monopoly,” Amazon does in fact collect a sales tax in 45 states. It doesn’t collect tax in one specific instance, which deals with third-party sales organized through its marketplace platform. Minnesota and Washington have already enacted laws requiring marketplace distributors like Amazon and Etsy to collect tax on third-party transactions. Amazon’s decision to increase its sales tax outreach is timely given the company’s recent Whole Foods acquisition, which will inevitably increase their physical foothold across the country. Last week, testimony to help codify Quill took place, as the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust law held a hearing regarding H.R. 287 [PDF], –the No Regulation without Representation Act (NRRA) This bill is intended to solve the issue of states taxing remote sellers name by (1) telling out-of-state businesses how to make or dispose of their products and (2) by imposing income tax or sales tax collection burdens on remote businesses.

In April, the Remote Transactions Parity Act, H.R. 2193 [PDF], and the Marketplace Fairness Act (MFA), S. 976 [PDF], were introduced with the common goal of expanding states’ taxing authority over remote retailers. Both Acts do a good job of limiting the compliance costs for out-of-state sellers, which has been a huge problem for states faced with sales tax issues. The Marketplace Fairness Act passed in the Senate in 2013 before stalling in the House. Not only would passing the MFA levy the sales on the federal level, but according to Pennsylvania Democratic Rep. Eddie Day Pashinski, it would provide an additional source of revenue for a state that ended 2 percent below its projected revenue in 2016. Despite the fact that President Trump himself has trouble comprehending the fundamentals of Amazon’s sales tax, it did not stop Treasury Secretary Steven Mnuchin from testifying before a Senate panel last week to say that the White House is “looking very closely at this issue.” Collecting online sales taxes, per Sen. Joe Manchin III (D-W.Va.), for rural states could prove cumbersome if not impossible because of the lack of resources to track down all these internet sales transactions. Even though there would be fewer transactions with a state like West Virginia than say Pennsylvania, Manchin’s concern remains valid.


President Trump’s tweets will not deter Amazon from collecting a sales tax across 45 states. The NRRA and MFA bills put forth before the Senate, however, hold significance in determining whether Quill will be overturned after 25 years. The physical presence requirement of Quill will continue to stir controversy as companies generate large sums of revenue from their online sales. Behemoths like Amazon hold the advantage over remote retailers–who the two bills in front of the Senate could hurt the most. As Sen. Manchin mentioned, smaller retailers may lack the resources of a bigger corporation. What is certain is that Quill and Amazon’s sales tax policies will continue to get opposition amongst legislative bodies and stakeholders alike. Trump’s tweets notwithstanding.

Matt Belenky is a recent graduate of the University of Pittsburgh School of Law. During law school he co-managed a legal podcast, wrote Paper Chase articles, and operated the social media accounts for JURIST. He has participated in Moot Court and represented his law school, on a team of three, in the National Baseball Arbitration Competition at Tulane Law School in both 2016 and 2017. He spent his entire 3L year interning at the Office of Chief Counsel at the IRS in Pittsburgh.

Suggested citation:Matt Belenky, Amazon, “Kill Quill,” and the Two Bills, JURIST – Dateline, August 1, 2017,

This article was prepared for publication by Dave Rodkey, Managing Editor for JURIST. Please direct any questions or comments to him at

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