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Supreme Court Justice Kennedy Retires in Wake of Wayfair

On June 27, Supreme Court Justice Anthony Kennedy announced his retirement, effective July 31, 2018. This announcement follows last week’s 5-4 decision in South Dakota v. Wayfair, authored by Justice Kennedy, which reversed the physical presence requirement originally established in National Bellas Hess and reaffirmed in Quill. Other important tax (and tax-related) cases have decided by the Supreme Court during Justice Kennedy’s tenure include: Commissioner v. Clark, 489 US 726 (1989); United States v. Goodyear, 493 US 132 (1989); Commissioner v. Soliman, 506 US 168 (1993); Commissioner v. Banks, 543 US 426 (2005); United States v. Home Concrete & Supply, LLC, 566 US 478 (2012); Obergefell v. Hodges, Sup. Ct. Dkt. No. 14-566 (2015); and Pereira v. Sessions, No. 17-459 (2018).

Justice Kennedy was appointed by President Ronald Reagan, and sworn in on February 18, 1988. He won unanimous confirmation. Although considered a conservative jurist, he was also the swing vote in favor of various social issues including same-sex marriage and the right to seek an abortion.

President Trump has already begun the search for Justice Kennedy’s replacement, but confirmation of the president’s nomination will not come without a serious fight. Indeed, whomever President Trump nominates, we can expect the same level of bipartisan animosity for the confirmation hearings as has marred his presidency thus far. Of course, any confirmation will require the Senate’s approval, and given the erosion of a conservative majority in the Senate, confirmation will be no small feat!




BREAKING NEWS: Sales Tax Battle Breaks Out in South Dakota; Quill’s Last Stand?

This post is a follow-up to a previous post on McDermott’s Inside SALT blog from April 21, 2016.

Introduction

On March 22, 2016, South Dakota Governor Dennis Daugaard signed into law Senate Bill 106, which requires any person making more than $100,000 of South Dakota sales or more than 200 separate South Dakota sales transactions to collect and remit sales tax. The requirement applies to sales made on or after May 1, 2016.

The law clearly challenges the physical presence requirement under Quill, and that’s precisely what the legislature intended. The law seeks to force a challenge to the physical presence rule as soon as possible and speed that challenge through the courts.

As we discussed in our earlier post, the big question in response to the legislation was whether taxpayers should register to collect tax.  For those who did not register, an injunction is now in place barring enforcement of the provisions until the litigation is resolved.

Last night and this morning two different declaratory judgment suits were filed in the Sixth Judicial Circuit Court of South Dakota regarding S.B. 106’s constitutionality, and more may follow. As has already been reported in a few outlets, one of these cases is American Catalog Mailers Association and NetChoice v. Gerlach (the ACMA Suit).  In ACMA, the plaintiffs are trade associations representing catalog marketers and e-commerce retailers.  The complaint can be found here.

What has yet to be widely reported is the other suit.  This suit (the State Suit) was filed by South Dakota.  Letters sent by South Dakota indicated that identified retailers needed to register by April 25.  Because the new law does not become effective until May 1, many observers thought that South Dakota might wait to file until after that date.  However, the suits have already been filed.

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