ABA Files Amicus Brief in Support of South Dakota Petition to U.S. Supreme Court Challenging Nexus Definition
- By David Grogan
On Thursday, November 2, the American Booksellers Association filed an amicus brief 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.
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. ABA was one of 15 groups to file an amicus brief in support of South Dakota’s petition to the Court to reconsider the 1992 decision.
In the brief, ABA President Robert Sindelar, the managing partner of Third Place Books, in Lake Forest Park and Seattle, Washington, stressed that he welcomes fair competition with online providers, so long as competition is on a fair playing field. “For me, it is easy to correlate the struggles of independent bookstores in other states with this sales tax inequity because, ironically, we never had this issue in our state,” he relates in the brief. “Amazon has always collected and remitted sales tax to the state. Struggles that ABA member bookstores in other states had with sales tax inequity, such as showrooming … were never much of an issue with us in Washington State. Indeed, that Seattle itself, the home of Amazon, has close to 20 independent bookstores in the greater Seattle area … is one example of how in a fair tax world, e-retailers and bricks-and-mortar can co-exist.”
Sindelar stressed that the sales tax fairness question has not gone away simply because Amazon now collects in the 45 states with sales tax laws. “This is an issue that should be corrected before the next big online retailer hits the market and tries to take advantage of this loophole — a loophole created by a 1992 decision that made sense prior to the age of e-commerce, but one that needs to be rewritten for retail in the 21st century,” he said.
The South Dakota petition to the Court stems from a state statute passed in 2016 designed to challenge Quill directly; it requires out-of-state retailers to collect and remit sales tax if they transact more than $100,000 of business in South Dakota or more than 200 sales. The 2016 statute was challenged by Wayfair, Overstock, and Newegg.
This past September, the Supreme Court of the State of South Dakota ruled that the state cannot force remote retailers to collect and remit sales tax if they do not have nexus in South Dakota. While many states have enacted sales and use tax compliance measures, no state has come close to fully recovering the sales tax revenues from online sales lost due to Quill. South Dakota Attorney General Marty Jackley appealed the decision to the U.S. Supreme Court, giving the justices a chance to overturn the 1992 Quill Corp. v. North Dakota precedent.
In South Dakota’s petition for writ of certiorari to the U.S. Supreme Court, the state stresses that there could be no better time than now to reconsider the 1992 Quill decision.
“Answering Justice Kennedy’s invitation, South Dakota enacted a law to challenge Quill’s physical-presence requirement,” the petition notes. “The result is a case in which the sole, dispositive issue is Quill’s continuing applicability, presented in a context that highlights its shaky legal foundations and harmful results. This Court should take this opportunity to reconsider a precedent that was ‘questionable even when decided, [and] now harms States to a degree far greater than could have been anticipated.’ DMA, 135 S. Ct. at 1135 (Kennedy, J., concurring).”
The petition further urges the court to grant the petition to “provide the clarity the legal system needs — even without regard to whether, on the merits, Quill should be overruled.”
Among the 15 groups that filed the amicus brief in support of South Dakota are the National Retail Federation, the Retail Litigation Center (the legal arm of the Retail Industry Leaders Association), the Multistate Tax Commission, the Streamlined Sales Tax Governing Board, and Attorneys General from 36 states.