For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
Aug. 29 — South Dakota's admission that its online sales tax statute violates federal law should compel a court ruling that the regime is unconstitutional, Wayfair Inc. and other digital retailers argued ( South Dakota v. Wayfair, Inc. , D.S.D., No. 3:16-CV-03019, reply briefs filed 8/26/16 ).
Briefing concluded Aug. 26 in the competing motions over S.B. 106, the state statute requiring remote retailers with annual in-state sales exceeding $100,000 or 200 separate transactions to collect and remit sales tax.
South Dakota has requested that the U.S. District Court for the District of South Dakota return the case to state court. The retailers—Wayfair, Overstock.com Inc. and Newegg Inc.— have asked for summary judgment striking the tax regime as unconstitutional.
Central to the retailers' reply brief was the state's Aug. 12 response, which the retailers argued mandates judgment in their favor. Absent remand to the lower court, South Dakota urged for the ruling requested by the retailers: that federal judicial law disallows the state's online sales tax (158 DTR H-1, 8/16/16).
The state reasoned that such a ruling was critical in spawning a U.S. Supreme Court review of its divisive 1992 opinion in Quill Corp. v. North Dakota, 504 U.S. 298. The decision prohibits states from requiring sales and use tax collection from companies lacking an in-state physical presence.
“Because the State of South Dakota agrees that its new ‘economic nexus' law is unconstitutional, the federal District Court, after it resolves the jurisdictional issue presented by the State's motion to remand, should enter judgment in favor of the Defendants and dismiss the State's complaint, with prejudice,” Matthew Schaefer, a partner with Brann & Isaacson LLP, which is representing the retailers, told Bloomberg BNA in an Aug. 26 e-mail.
The state's reply brief reiterated that it “built this action in order to facilitate review by the Supreme Court of the United States.” However, it maintained that at this stage, jurisdiction rests with the state court.
Potential paths for the federal court to take on the parties' motions include:
To contact the reporter on this story: Jennifer McLoughlin in Washington at email@example.com
To contact the editor responsible for this story: Ryan Tuck at firstname.lastname@example.org
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)