United States

North Dakota lays groundwork to challenge Quill 25 years later

Enacts economic sales and use tax nexus statute


On April 10, 2017, North Dakota Gov. Burgum signed into law Senate Bill 2298, requiring remote sellers with no physical presence in North Dakota to register, collect and remit sales taxes on sales to North Dakota customers. Importantly, the bill includes a ‘contingent effective date’ – only becoming effective when the U.S. Supreme Court overturns Quill v. North Dakota, or otherwise confirms that a state may constitutionally impose a sales and use tax on remote sellers. The bill was first introduced with an effective date of July 1, 2017, however.

Senate Bill 2298 imposes a sales and use tax collection and remittance requirement on remote sellers without a physical presence in North Dakota if the seller meets either of the following criteria in the previous calendar year or the current year:

  1. The seller’s gross revenue from the sale of tangible personal property and other taxable items delivered into North Dakota exceeds $100,000
  2. The seller sold tangible personal property and other taxable items for delivery into North Dakota in 200 or more separate transactions

These requirements are identical to those requirements enacted by South Dakota in early 2016—the first state to directly challenge Quill through legislative action.


North Dakota is essentially the state that started it all when it comes to today’s sales and use tax physical presence standard. The Quill decision originated out of North Dakota and was essentially unchallenged until South Dakota enacted its remote seller provision in 2016.

The North Dakota economic sales and use tax nexus law is not currently effective and will not be until the U.S. Supreme Court overturns Quill. Remote sellers that deliver over $100,000 of tangible personal property or make 200 or more sales transactions into the state should be prepared if the Supreme Court addresses Quill. However, it is not clear whether the Supreme Court would accept a Quill challenge—the South Dakota law is currently the most likely candidate for review.

Remote-seller sales tax collection may also be addressed by Congress, although that is becoming less likely to occur this year as federal tax reform is highly anticipated. Additionally, other items on President Trump’s legislative agenda, such as reforms to the Affordable Care Act and immigration policies, are likely to take precedence.  

Almost two dozen states have introduced economic sales and use tax nexus bills this legislative session including Arkansas, Georgia, Indiana, Maryland, Mississippi, Nebraska, North Carolina and Utah, among others. Wyoming enacted economic sales and use tax nexus earlier this year and Massachusetts recently issued a policy directive addressing remote internet sellers. For a comprehensive overview of the economic sales and use tax nexus landscape, please read our article, Economic sales and use tax nexus laws.


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