#24: The Amazon Tax

Like Nevada, many states rely very heavily on sales tax income to fund government services. In the olden days, states required businesses within their borders to remit a percentage of their sales as taxes to the state government. These taxes, of course, are passed along to the customer, who often sees them added on to total purchase prices on their sales receipts.

When the vendor of the product lives out of state, this poses a big problem for the state government. As of the Court’s decision in Quill Corp. v. North Dakota (1992), states have been stymied in their attempts to force vendors to collect and remit these taxes. In-state consumers are still required to pay the taxes, of course. But it is incredibly difficult to enforce this kind of requirement when the state has no idea how much money any particular individual rightly owes.

Enter Direct Marketing Association v. Brohl. The Supreme Court has just granted certiorari in this case, which deals with Colorado’s attempt to get around the restrictions in Quill. The SCOTUSblog page for the case lays out some of the details. Although the Court of late has denied certiorari on direct tax remission law challenges, the Court’s willingness to hear this case is an important development.

Paper Topic #24: Are the case facts in Brohl different enough from those in Quill to mandate a different finding? Given the holding in Quill, coupled with the changing nature of the internet economy, is it likely that the Court will feel pressure to adopt a new strategy here? If Congress stepped in to force remote retailers to remit state sales taxes, would that change the calculus in Quill?

Suggested Reading: Haile, A. J., Gamage, D., & Shanske, D. (2013). A Potential Game Changer in E-Commerce Taxation. State Tax Notes67(10).

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