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Adam L. Sandler Featured In Law360 Article Discussing Supreme Court’s Ruling in North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust

June 26, 2019

As published in Law360, June 25, 2019, 6:25 PM EDT

Law360 (June 25, 2019, 6:25 PM EDT) — The U.S. Supreme Court’s refusal to apply its holding in Wayfair to a recent trust taxation suit put states on notice that what satisfies due process for sales and use tax collection isn’t necessarily an across-the-board standard.

“The distinction [between Kaestner and Wayfair] was important, and it was correct,” said Adam L. Sandler, an Associate of Einhorn, Barbarito, Frost & Botwinick, PC.

“In Wayfair, you have a transaction between [a state customer and an out-of-state business]. Here, there’s no transaction; there’s no connection between the trust and the state.”

In Kaestner, North Carolina had asked the justices to apply Wayfair to its efforts to tax the out-of-state trust, under the argument that if physical presence is not necessary for sales and use taxation in a digital world, it should not be necessary for trust taxation. But the court in a unanimous decision instead applied Quill, the case that Wayfair supposedly vanquished, holding that case’s language affirming a “minimum connection, between the state and the person” was the relevant standard. Such a ruling showed that while Quill may be dead for aspects of sales and use tax collection, it is alive and well when a state tries to reach across its borders without showing a sufficient link to what it seeks to tax.

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