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Connecticut: Revocation of Quill Notice

  • Dec 26, 2013 | Gail Cole

 Connecticut: revoked notice may impact use tax for mail order sellers.

Updated, 1.21.2014: A recent article in Forbes warns that "out-of-state retailers should proceed cautiously in Connecticut" due to the Revocation of Special Notice 92(19). Until the state clarifies its position, "retailers have no sense of what will constitute nexus with the state for sales and use tax purposes and whether the state will now assert that, despite Quill, a mere 'economic presence' will trigger the requirement to collect and remit sales tax."

The Connecticut Department of Revenue Services (DRS) website brings up this message.

Businesses that may be affected by this announcement are advised to contact DRS at 1-860-297-5962 for additional information.

Quill Corp. v. North Dakota

Quill Corp. v. North Dakota is a landmark 1992 United States Supreme Court ruling that has greatly shaped the relationship between states and remote retailers. It held that:

  1. “The Due Process Clause does not bar enforcement of the State’s use tax against Quill.”
  2. “The State’s enforcement of the use tax against Quill places an unconstitutional burden on interstate commerce.”

The ruling determined that “a mail-order house may have the ‘minimum contacts’ with a taxing State as required by the Due Process Clause, and yet lack the ‘substantial nexus’ with the State required by the Commerce Clause.” In his opinion, Justice Stevens reminded that the two constitutional clauses impose requirements that are “not identical and are animated by different constitutional concerns and policies.” To whit:

  • “Due process concerns the fundamental fairness of governmental activity, and the touchstone of due process nexus analysis is often identified as ‘notice’ or ‘fair warning.’”
  • “…the Commerce Clause and its nexus requirement are informed by structural concerns about the effects of state regulation on the national economy.”

Ultimately, the justices agreed that the “underlying issue here is one that Congress may be better qualified to resolve and one that it has the ultimate power to resolve.” Yet unless and until Congress does so, states rely on Quill and similar high court rulings to shape their sales and use tax policy.

The federal solution

The U.S. Senate did pass the Marketplace Fairness Act of 2013 (MFA) last May. It would grant states with simplified tax laws the right to impose a sales tax collection obligation on remote retailers. However, MFA has languished in the House.

Remote sellers go viral

Meanwhile, remote sales are exploding.

Remote retail in 2013 is much different than it was back when Quill was decided in the spring of 1992. According to ABC News, “This year has seen a surge in online shopping…. online Thanksgiving weekend sales jumped about 15 percent compared to 2012, and the Christmas week increase may have been greater.” Indeed, so many people ordered items online that UPS and FedEx were “overwhelmed by delivery problems just before Christmas.”

The rise of online shopping has cut into state and local sales tax revenue—an estimated “$2.8 billion for 2011 and 2012, combined.” As a result, many states are looking for ways to impose sales and use collection requirements on out-of-state retailers. Affiliate nexus laws have been effective for some.


Connecticut lawmakers passed an affiliate nexus law in 2011 that created a sales tax collection requirement for Amazon. In response, Amazon severed its relationship with Connecticut affiliates.

However, Amazon and Connecticut eventually reached an agreement: Amazon would build a distribution center in the state (bringing jobs) and start collecting sales tax, and the state would “not pursues back taxes on past sales.

Amazon began collecting sales tax in Connecticut on November 1, 2013. The state is anticipating a $15 million jump in annual sales tax revenue from Amazon alone.

Just what Connecticut’s revocation of Special Notice 92(19) means for mail order retailers remains to be seen.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.