15 Amicus Briefs Filed in Support of South Dakota Sales Tax Fairness Petition to Supreme Court

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In early November, some 15 amicus briefs were filed to the U.S. Supreme Court in support of South Dakota v. Wayfair, Overstock, and Newegg, a petition urging the U.S. Supreme Court to revise a 1992 decision that defines which retailers are liable to collect and remit the sales tax of a state.

Along with the American Booksellers Association, which filed its brief on Thursday, November 2, groups that filed briefs last week in support of sales tax fairness were:

The 1992 Quill vs. North Dakota U.S. Supreme Court decision currently forbids states from requiring retailers that do not have a store, office, warehouse, or sales agent in the state from collecting and remitting sales tax to that state. Notably, in 2015, Supreme Court Justice Anthony Kennedy welcomed a challenge to reconsider the precedent set by Quill. The 15 groups filed their amicus briefs in support of South Dakota’s petition to the Court to reconsider the 1992 decision. (For more on ABA’s amicus brief and the South Dakota petition, see last week’s article in Bookselling This Week.)

In their brief, the six federal legislators argue that Quill causes states to lose revenue: “It is estimated that, as of 2015, total sales and use taxes uncollected because of Quill amounted to almost $26 billion annually,” the lawmakers wrote. “Quill … also places merchants with physical locations in their States at an economic disadvantage because they must, in effect, charge a higher price for a product also sold by an out-of-state retailer that does not have to collect a tax that is imposed on in-state buyers and must be collected by in-state sellers.”

The brief filed by the State & Local Legal Center, et. al, echoes the lawmakers and notes that due to “the obstacles erected by Quill, States have enacted various legislative fixes to attempt to collect the billions of dollars of sales and use taxes owed to them by out-of-state merchants.”

In its amicus brief, the National Retail Federation (NRF) argued that technology has made concerns over myriad taxing jurisdictions obsolete, citing a wide variety of software available to automatically calculate the sales tax owed, much of which is available for free or at low cost. Many online sellers already collect sales tax from customers in multiple states, either voluntarily or because they have a physical presence that requires them to do so, NRF said. “Given the ubiquity of affordable products that help businesses calculate, collect, and remit sales and use taxes, there is little to no burden imposed on remote sellers,” the brief said. “Technology has simply eroded those distinctions.”

NRF’s brief continued: “The burdens associated with state sales tax collection in the mail-order catalog context simply are not present in today’s Internet sales environment.”.

In its amicus brief, Retail Litigation Center (RLC) argued: “[W]aiting and watching as businesses and States maneuver around Quill is like watching to see how a badly broken bone knits on its own before deciding whether or not to set it back in proper alignment. The business and legal structures that are growing up around Quill are crooked. Some may prove workable, after a fashion, but they will be necessarily inferior to the structures that would arise from a level playing field and a coherent Commerce Clause jurisprudence.”

“It is imperative,” RLC continued, “that as the retail industry adapts to the growing ubiquity of the Internet and e-commerce, that transformation is driven by business efficiencies and not tax dodges, so that community-based retailers are not forced to abandon their physical presence in order to avail themselves of Quill’s ‘tax shelter.’ The invisible hand of the market, and not the visible thumb of Quill on the scales, should guide retail’s growth.”

“The problem with the physical-presence rule is that it was first conceived of in 1967, two years before the moon landing and decades before the first retail transaction occurred over the Internet,” write the 36 attorneys general in their amicus brief. “The rule is therefore not responsive to the ‘far-reaching systemic and structural changes in the economy’ caused by the Internet. If anything, the rule impairs rather than advances the Commerce Clause’s underlying objective of promoting a free market undisturbed by discriminatory advantages. Today, remote retailers, invoking Quill, effectively receive a subsidy because of how unlikely it is that their customers will ever pay the state sales and use taxes that they undeniably owe.”