As states move aggressively to assert their tax power outside their borders, National Taxpayers Union Foundation (NTUF) today filed an amicus brief in defense of taxpayers with the United States Supreme Court in the case of South Dakota vs. Wayfair, Inc., Overstock, Inc., and Newegg Inc. Last year, South Dakota drafted a law that it knew to be unconstitutional, brought action against internet sellers that it acknowledged to be acting lawfully, and sped its way to the Supreme Court’s steps with a flawed case. In the brief, NTUF argues that the Supreme Court should deny certiorari to protect taxpayers and send a signal to power-hungry states across the country that attempts to subvert the Constitution in order to seize more tax and regulatory power over interstate commerce will not pass muster with the Court.
NTUF Executive Vice President Andrew Moylan, an expert on internet tax issues who has testified on the topic multiple times before Congress and Director of the Interstate Commerce Initiative at the organization, said, “South Dakota’s cynical attempt to pass an unconstitutional law has finally made its way to the highest court in the land, but their weak case does not merit review. In their rush to assert new powers over interstate commerce, South Dakota failed to establish due process over the case’s respondents and enacted a law that directly conflicts with Supreme Court precedent.”
The South Dakota case asks the Court to abrogate its holding in Quill v. North Dakota, a 1992 case in which the Supreme Court decided that states may not impose tax obligations on businesses without a physical presence inside their borders. If the Supreme Court were to grant South Dakota’s wish, NTUF’s brief argues that it would open the floodgates of states asserting tax authority over businesses and individuals all across the country, regardless of where they’re actually located. This would force sellers to contemplate the notion of complying with the different rules, rates, and definitions of more than 12,000 taxing jurisdictions nationwide.
Moylan concluded, “The internet is big, powerful, and borderless. We must not let it become the vehicle for state tax and regulatory power to become similarly big, powerful, and borderless. The Supreme Court can defend taxpayers, internet retail, and the free flow of interstate commerce if it denies certiorari in this case.”
You can view the full brief here.