[BoulderCouncilHotline] FW: US Supreme Court Hears Oral Argument in Internet Sales Tax Case

[Jones, Suzanne]

Dear All—

I wanted to share this analysis of the recent oral arguments for the Supreme Court case South Dakota v. Wayfair on the issue of internet sales tax collection – which provides broader context for our upcoming study session on our budget and trends in Boulder’s sales tax revenues.

In South Dakota v. Wayfair<https://protect-us.mimecast.com/s/lFYBC73VqJhAZj8lfEPLmW?domain=scotusblog.com> South Dakota is asking the Supreme Court to overrule precedent and hold that states and local governments may require retailers with no in-state physical presence to collect sales tax. The National Conference of State Legislatures<https://protect-us.mimecast.com/s/JoJ-C82KrYi6Y821Hg6dw0?domain=ncsl.org> estimated that states lost $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases.

Cheers,
Zan

Suzanne Jones
Mayor, City of Boulder
(720) 633-7388
joness at bouldercolorado.gov

From: Catherine Marinelli<mailto:catherine at metromayors.org>
Sent: Wednesday, April 18, 2018 8:36 AM
Subject: Fwd: US Supreme Court Hears Oral Argument in Internet Sales Tax Case

Mayors -

Analysis from the State & Local Legal Center in D.C. of the oral arguments yesterday in the Supreme Court. Thanks to Sam Mamet for sharing this (his email with Colorado context also included below).

Want more? See the transcript of South Dakota v. Wayfair  oral arguments<https://protect-us.mimecast.com/s/n0RiC5yKo0TZ6YXEHjxkMP?domain=dropbox.com>.

Catherine Marinelli
Director, Metro Mayors Caucus
Principal, Civic Results
PO Box 200276
Denver, CO 80220
720.280.3358
**********************************************************************************
Begin forwarded message:

From: Sam Mamet <smamet at cml.org<mailto:smamet at cml.org>>
Subject: US Supreme Court Hears Oral Argument in Internet Sales Tax Case
Date: April 17, 2018 at 3:55:59 PM MDT

Colleagues – Please scroll below for an excellent analysis written by our long-time friend, Lisa Soronen, Executive Director of the national State-Local Legal Center. CML is a long standing member of the Center. No one does a better job of keeping track of key cases affecting the interests of the state and of local governments than does the Center. Lisa is in the thick of it all. The Center frequently files amicus briefs before SCOTUS, which does regularly cite them.

Not in a long time have we had a case before the Supremes as important to our interests as this one.

If we are to get any relief on ecommerce taxation, it will likely be through the Wayfair case. Madame AG Coffman coordinated an excellent effort among a number of states in filing a brief. Kudos to her efforts. The Justice Department argued in support of our interests before the Court this morning. President Trump has been very vocal in support of the interests of the states and local governments.

I think Lisa’s vote counting is correct, so we have a shot, and will know by the Court’s end of term in June.

I have been following this issue forever. If we are to get any relief out of the Congress, the House will have to flip in the mid-terms. The Senate has never been a problem. There are key members of the House leadership and certain Committee Chairs dead set against the issue, or will only address it with a bill that has a lot of restrictions not palatable to us. If this ever got on the House floor, a “clean” bill would overwhelmingly pass.

Our delegation is pretty much split along party lines. In the House, Rep. Coffman has been supportive. His fellow Rs, however, (Tipton, Lamborn, Buck) have not and never will be. Sen. Bennet has been a strong supporter. In fact, he has offered amendments to the Senate bill on our behalf. Sen. Gardner’s position is not as clear.

There is enabling state legislation already on the books from several years ago ready to implement anything in this area. We were major drafters of that law.

Dianne Criswell (dcriswell at cml.org<mailto:dcriswell at cml.org>) and yours truly (smamet at cml.org<mailto:smamet at cml.org>) are your prime contacts. If you wish to respond, please do so directly to either of us.

Cheers, and go Rockies!

Sam Mamet
Executive Director
Colorado Municipal League
1144 Sherman Street, Denver, CO 80203
(p) 303-831-6411 / 866-578-0936 • (f) 303-860-8175
smamet at cml.org<mailto:smamet at cml.org>  •  www.cml.org<https://protect-us.mimecast.com/s/arrGC68KpVirylpztlZq5f?domain=cml.org>

Empowered cities and towns, united for a strong Colorado.

This e-mail may contain an advertisement or solicitation. To refuse future commercial e-mail solicitations from this sender, please respond accordingly tosmamet at cml.org<mailto:smamet at cml.org>.

On Behalf Of Soronen, Lisa

HI all: Oral argument in South Dakota v. Wayfair made me nervous to say the least. Justice Breyer’s uncertainty probably won’t work in our favor.  So we need the Chief to come through for us. Will he or won’t he?  Only time will tell.

In South Dakota v. Wayfair<https://protect-us.mimecast.com/s/lFYBC73VqJhAZj8lfEPLmW?domain=scotusblog.com> South Dakota is asking the Supreme Court to overrule precedent and hold that states and local governments may require retailers with no in-state physical presence to collect sales tax. TheNational Conference of State Legislatures<https://protect-us.mimecast.com/s/JoJ-C82KrYi6Y821Hg6dw0?domain=ncsl.org> estimated that states lost $23.3 billion in 2012 from being prohibited from collecting sales tax from online and catalog purchases.

In 1967 in National Bellas Hess  v. Department of Revenue of Illinois<https://protect-us.mimecast.com/s/SwyAC9rYvXik2VlQUKrxb-?domain=supreme.justia.com>, the Supreme Court held that per its Commerce Clause jurisprudence, states and local governments cannot require businesses to collect sales tax unless the business has a physical presence in the state.

Twenty-five years later in Quill v. North Dakota<https://protect-us.mimecast.com/s/qioXC0RDj3HGm07VtRv4Ih?domain=scholar.google.com> (1992), the Supreme Court reaffirmed the physical presence requirement but admitted that “contemporary Commerce Clause jurisprudence might not dictate the same result” as the Court had reached in Bellas Hess.

Customers buying from remote sellers still owe sale tax but they rarely pay it when the remote seller does not collect it. Congress has the authority to overrule Bellas Hess and Quill but has thus far not done so.

Even before oral argument South Dakota could count three votes likely in favor of overturning Bellas Hess and Quill. In March 2015 Justice Kennedy wrote a concurring opinion stating that the “legal system should find an appropriate case for this Court to reexamine Quill.” While on the Tenth Circuit then-judge Gorsuch wrote an opinion strongly implying that given the opportunity the Supreme Court should overrule Quill. Finally, while Justice Thomas voted against North Dakota in Quill he has since rejected the concept of the dormant Commerce Clause, on which the Quill decisions rests.

At oral argument Justices Kennedy and Gorsuch asked Wayfair’s attorney different lines of questions both of which indicated they remain anti-Quill. Justice Thomas, as always, was silent. The most vocal champion of overturning Quill was Justice Ginsburg. She said the Court needs to take responsibility for overturning precedent it created which is no longer appropriate in the current economy instead of relying on Congress to act.

Justice Breyer was clearly torn about the case. He said he read both sides’ briefs and concluded both positions were “absolutely right.” He looked to the attorneys arguing for both sides to help sort out issues including exactly how much money is on the table, whether it really is easy and inexpensive to collect sales tax, and whether tax collection should be retroactive.

Justice Sotomayor lead the charge defending Quill asking South Dakota’s attorney about many of the same issues Justice Breyer raised—but taking a more certain approach that the answers were known and point to keeping Quill the law of the land. Justice Kagan asked a number of questions expressing the view that Congress should overturn Quill, if it wants to, given that Congress can craft a more complicated solution than the Court can. Justice Alito also didn’t seem particularly sympathetic to South Dakota’s position suggesting that if Quillwas overturned states would “grab everything they could” rather than exempt small businesses from having to collect.

Chief Justice Roberts asked questions of both sides, something he has done more often since Justice Scalia died. His questions unfavorable to South Dakota focused on, among other things, the burden of requiring small businesses to collect sales tax and honoring Congress’s decision to leave things the way they are.

The Supreme Court will issue an opinion in this case by the end of June.


Lisa Soronen
Executive Director
State & Local Legal Center
444 North Capitol Street, N.W., Suite 515
Washington, D.C. 20001
Phone: (202) 434-4845
Fax: (202) 737-1069
Email: lsoronen at sso.org<mailto:lsoronen at sso.org>
Website: http://www.statelocallc.org/<https://protect-us.mimecast.com/s/LLxGCgJMWXCAG5o9fYIPAo?domain=statelocallc.org>
Twitter: @SLLCSCOTUS


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