High Court Must Keep Digital Sales Tax Law: Wayfair

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By Ryan Prete

E-retailers have submitted their last filing to the U.S. Supreme Court urging the justices to maintain a 26-year-old precedent that bars states from imposing sales tax collection obligations on vendors lacking an in-state physical presence.

The brief on the merits is the latest filing in the saga of South Dakota v. Wayfair, a direct challenge to the 1992 ruling in Quill Corp v. North Dakota prohibiting the imposition of sales tax on digital interstate purchases. The case is set to for oral argument April 17.

Among a variety of arguments, the March 28 brief—filed by e-retailers Wayfair Inc., Newegg Inc., and Overstock.com Inc.—contends that retailers “have justifiably continued to rely on Quill” and “were entitled to take this court at its word.”

The brief argues that tax compliance software doesn’t ease the burden on retailers, that “changed circumstances do not warrant overturning Quill,” and that the amount of uncollected tax often reported is far lower than estimated and continually diminishing.

The brief also argues that “Congress remains the proper body to address whether, and in what manner, to alter the Quill rule,” and that “overruling Quill presents the risk of crippling liability for retailers in over 30 states.”

Friend-of-the-court briefs from outside parties in favor of the e-retailers are due to the court April 4.

Missing From Omnibus

Rep. Kristi Noem (R-S.D.) fell short in a last-minute attempt to add a digital tax provision to a government spending bill March 23.

Noem, the sponsor of the the Remote Transactions Parity Act of 2017 (H.R. 2193) (RTPA), which seeks to kill Quill, has been vocal in her quest to pass digital sales tax legislation before the high court can rule on South Dakota v. Wayfair in June.

The case is South Dakota v. Wayfair, Inc. , U.S., No. 17-494, brief on the merits filed 3/28/18 .

To contact the reporter on this story: Ryan Prete in Washington at rprete@bloombergtax.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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