The Oregon Tax Court held that the state was not constitutionally prohibited from imposing its statewide 911 tax on an out-of-state VOIP service provider with no physical presence in the state. The court held that the 911 tax was not a sales or use tax because it was not measured by sales price (rather it was a fixed fee) or imposed on the purchase or sale of telecommunication services (rather on those who have access to the 911 system through such services). Accordingly, the 911 tax was not a tax controlled by the Quill physical presence standard for Commerce Clause purposes. Instead, the court found that the taxpayer’s regular sales of telecommunication devices and services directly to Oregon residents constituted sufficient purposeful availment (Due Process) and substantial nexus with the state (Commerce Clause) to satisfy both constitutional standards. In finding that the tax did not create an undue burden on interstate commerce, the court found that the taxpayer did not show that the tax created a “welter of complicated obligations” similar to the sales and use taxes in Bellas Hess and Quill. Ooma Inc. v. Dep’t of Revenue, No. TC-MD 160375G (Or. Tax Ct. Apr. 13, 2018).
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