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Argument preview: Justices to reconsider sales-tax collection in internet era
Argument preview: Justices to reconsider sales-tax collection in internet era
Mark Walsh
dcmark26@gmail.com
Posted Tue, April 10th, 2018 10:46 am
In 1992, the U.S. Supreme Court ruled in Quill Corp. v. North Dakota that the Constitution’s commerce clause prohibits the states from imposing a sales tax on out-of-state retailers that do not have a physical presence in the state, such as a store, warehouse or sales representative. Next Tuesday, the justices will hear oral argument in South Dakota v. Wayfair Inc., which could result in overruling Quill and could significantly affect sales-tax collection in the digital age. In Quill, the justices closely weighed an earlier decision that had articulated the physical-presence rule. In 1967, in National Bellas Hess, Inc. v. Illinois Department of Revenue, which also involved mail-order sales, the court ruled that a “seller whose only connection with customers in the state is by common carrier or the United States mail” lacked the requisite minimum contacts with the state to justify “impos[ing] the burdens” of collecting taxes on interstate sales.
....
South Dakota responded in 2016 by passing a measure known as Senate Bill 106, which looks to a retailer’s economic presence rather than its physical presence within the state. Retailers must collect sales taxes if they have more than $100,000 in sales or more than 200 transactions in South Dakota. The measure also sought to protect retailers from retroactive liability.
The state sued four web-based retailers under the new law. One opted not to assert a Quill defense, while the three others — Wayfair Inc., Overstock.com Inc., and Newegg Inc. —challenged the law. (Amazon is not part of the case, nor has it filed or joined an amicus brief. The giant retailer agreed in 2017 to start collecting sales tax in every state that has one, although it does not do so on sales by its “Amazon Marketplace” partners.)
....
In its merits brief in the Supreme Court, the state stresses that “times have changed” in the retail world and that “in the digital age where ubiquitous e-commerce is projected into our homes and smartphones over the internet, traditional ‘physical’ presence is an increasingly poor proxy for a company’s ‘nexus’ with any given market or state.” The state argues that abrogating the physical-presence requirement is now essential to eliminate arbitrary and unclear results, promote interstate commerce, and avoid important, ongoing, and unjustifiable harms to the states.
....
Posted in South Dakota v. Wayfair, Featured, Merits Cases
Recommended Citation: Mark Walsh, Argument preview: Justices to reconsider sales-tax collection in internet era, SCOTUSblog (Apr. 10, 2018, 10:46 AM), http://www.scotusblog.com/2018/04/argument-preview-justices-to-reconsider-sales-tax-collection-in-internet-era/
Mark Walsh
dcmark26@gmail.com
Posted Tue, April 10th, 2018 10:46 am
In 1992, the U.S. Supreme Court ruled in Quill Corp. v. North Dakota that the Constitution’s commerce clause prohibits the states from imposing a sales tax on out-of-state retailers that do not have a physical presence in the state, such as a store, warehouse or sales representative. Next Tuesday, the justices will hear oral argument in South Dakota v. Wayfair Inc., which could result in overruling Quill and could significantly affect sales-tax collection in the digital age. In Quill, the justices closely weighed an earlier decision that had articulated the physical-presence rule. In 1967, in National Bellas Hess, Inc. v. Illinois Department of Revenue, which also involved mail-order sales, the court ruled that a “seller whose only connection with customers in the state is by common carrier or the United States mail” lacked the requisite minimum contacts with the state to justify “impos[ing] the burdens” of collecting taxes on interstate sales.
....
South Dakota responded in 2016 by passing a measure known as Senate Bill 106, which looks to a retailer’s economic presence rather than its physical presence within the state. Retailers must collect sales taxes if they have more than $100,000 in sales or more than 200 transactions in South Dakota. The measure also sought to protect retailers from retroactive liability.
The state sued four web-based retailers under the new law. One opted not to assert a Quill defense, while the three others — Wayfair Inc., Overstock.com Inc., and Newegg Inc. —challenged the law. (Amazon is not part of the case, nor has it filed or joined an amicus brief. The giant retailer agreed in 2017 to start collecting sales tax in every state that has one, although it does not do so on sales by its “Amazon Marketplace” partners.)
....
In its merits brief in the Supreme Court, the state stresses that “times have changed” in the retail world and that “in the digital age where ubiquitous e-commerce is projected into our homes and smartphones over the internet, traditional ‘physical’ presence is an increasingly poor proxy for a company’s ‘nexus’ with any given market or state.” The state argues that abrogating the physical-presence requirement is now essential to eliminate arbitrary and unclear results, promote interstate commerce, and avoid important, ongoing, and unjustifiable harms to the states.
....
Posted in South Dakota v. Wayfair, Featured, Merits Cases
Recommended Citation: Mark Walsh, Argument preview: Justices to reconsider sales-tax collection in internet era, SCOTUSblog (Apr. 10, 2018, 10:46 AM), http://www.scotusblog.com/2018/04/argument-preview-justices-to-reconsider-sales-tax-collection-in-internet-era/
