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By Ryan Prete
Interstate tax compliance complexities and burdens are among the many reasons for the U.S. Supreme Court to uphold its 26-year-old rule that forbids states from imposing sales tax collection obligations on remote retailers.
The American Catalog Mailers Association made that argument in its April 3 friend-of-the-court brief that urges the justices to maintain the 1992 Quill Corp v. North Dakota decision—under which a vendor must have an in-state physical presence before obligated to collect sales tax.
“The varied sales tax collection schemes applied by the states and localities would subject catalog companies to not only new and overwhelming collection burdens, but also additional liabilities for under-collection or to class action plaintiffs for over-collection,” the brief said. “Good faith attempts at compliance are not enough in the face of tax audits or class action lawsuits. And, the administrative costs to comply with the ever-changing laws are real and substantial.”
The ACMA filed its brief in support of several e-retailers contesting a state digital sales tax in South Dakota v. Wayfair. Oral argument is scheduled for April 17, and practitioners expect a decision by late June.
Among many arguments, the ACMA contended that overturning Quill would expose catalog retailers to significant tax liability for prior transactions.
“The states cannot commit to prospective application only,” according to the ACMA brief. “Current laws on the books of some of the states permit collection of taxes for prior transactions using standards beyond what Quill allows. Assessments based on these laws would not be applying the law retroactively because the state laws already exist. Moreover, state constitutional and statutory law will be cited by the states as preventing them from disregarding and not enforcing the state laws that predate the Court’s decision in this appeal.”
The ACMA is involved in several pending lawsuits contesting varying state digital sales tax regimes, including challenges in Tennessee and Ohio.
The ACMA brief is among the first briefs favoring e-retailers Wayfair Inc., Newegg Inc., and Overstock.com Inc. in the South Dakota dispute. All briefs supporting the companies are due April 4.
Other organizations that have filed briefs in favor of the e-retailers are:
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