Professor Shanske Comments for State Tax Notes on Online Businesses and State Taxes

Professor Darien Shanske commented for an article in State Tax Notes on the efforts by states to have online businesses collect the use tax.

In Quill Corp. v. North Dakota, the U.S. Supreme Court held that a business must have a physical presence in a state in order for that state to have the power to compel that business to collect the state's use taxes. Bills in the Washington and Nevada legislatures seek to expand the states' definitions of physical presence, but Shanske said it would be unwise for states to assume they could collect all the revenue they are losing so long as the Quill requirement is in place.

"Clearly, they're hoping Quill will be overturned" or that Congress will pass legislation granting states more authority to tax online retailers, Shanske said.  "There's a lot of money involved and [the Quill rule is] distorting the economy in various ways."

Darien Shanske is a Professor of Law at UC Davis. His academic interests include taxation, particularly state and local taxation, local government law, public finance, and political theory, particularly jurisprudence.