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By Tripp Baltz
Alabama’s tax commissioner said she will ask the state Legislature to consider a Colorado-style reporting and notice requirement for out-of-state retailers that don’t collect and remit the state’s use tax on remote sales.
“We’re planning to drop in a reporting bill in Alabama,” Julie P. Magee said Dec. 15 during the Multistate Tax Commission’s Executive Committee meeting in Houston.
Magee’s remark came three days after the U.S. Supreme Court refused to consider two petitions to review a February ruling by the U.S. Court of Appeals for the Tenth Circuit that Colorado’s 2010 law doesn’t burden interstate commerce.
If Colorado’s notice and reporting law was upheld, many had expected additional states to launch their own statutes as part of the ongoing flurry of activity to capture more tax revenue from remote retailers. The states could draw upon the MTC’s model sales and use tax reporting and notice statute as a template, Helen Hecht, MTC general counsel, told the committee Dec. 15.
The model was put on hold in 2012 while the Colorado scheme was tested in court.
“We are now looking at this model again,” Hecht said. “We know there will be states that are interested in considering it.”
A First Amendment challenge remains against the Colorado law, so the injunction hasn’t yet been lifted. “The actual procedural situation in Colorado is uncertain, but because of the denial of cert., at least the commerce clause constitutional issues have been resolved,” she said.
Several states, including Oklahoma and Louisiana, recently enacted similar notification and reporting regimes, but many passed them in conjunction with other nexus provisions.
The U.S. Supreme Court petitions were filed in Direct Mktg. Ass’n v Brohl, U.S., No. 16-267, cert. denied 12/12/16 and Brohl v. Direct Mktg. Ass’n, U.S., No. 16-458, cert. denied 12/12/16 . Like other litigation bubbling up in Alabama and South Dakota, the Colorado litigation ultimately was targeted at toppling the high court’s 1992 Quill Corp. v. North Dakota rule, which upheld that physical presence is required to collect state sales and use taxes.
During discussion of the DMA v. Brohl case at the MTC meeting, Greg Matson, the commission’s executive director, recommended that the Executive Committee could take up the MTC model at its next meeting in May. Matson said the MTC previously surveyed affected states to see how many would consider adopting a law similar to the model, but the idea didn’t garner a majority of votes. The survey could be conducted again in light of the rulings over the Colorado law, he said.
Wood Miller, chair of the MTC’s Uniformity Committee, said the committee will take a fresh look at the current version of the model up to and through the MTC’s next set of committee meetings in March in San Diego, then “report back” to the Executive Committee.
Matson said the model could also undergo another public hearing like it did in May 2011 before it was tabled pending resolution of the Colorado litigation.
Hecht also updated the Executive Committee on the MTC’s proposed amendments to the model general allocation and apportionment regulations, under Article IV, Sections 1 and 17 of the Multistate Tax Compact. The proposed amendments are pending results of a survey to see which MTC member states would consider adopting them, she said.
If a majority of states respond that they are willing to consider adopting those regulations, then they will be placed on the agenda for the commission to consider.
“We’ve gotten responses from a little over half,” Hecht said. “If you haven’t responded, please do so.”
Matson asked if the Executive Committee would be interested in having a special meeting, perhaps as early as February, to act on the amendments should a majority of states say they will adopt them. Committee members responded “yes.”
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The MTC's model sales and use notice and reporting statute is at http://src.bna.com/kM1.
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