Category Archives: Sales and Use Tax

‘Wayfair’: What Are the Practical Retroactivity Concerns?

▪ Written by and
What is the practical risk that states attempt to apply Wayfair retroactively? And should taxpayers rush to limit exposure for historical periods by entering into voluntary disclosure agreements with states that might assess tax retroactively under Wayfair? In an article originally published in Bloomberg BNA’s Weekly State Tax Report, Zach Gladney and Charles Wakefield explain why applying Wayfair retroactively would be misguided and unsuccessful. To read the full article, click here. [...]Read more

Colorado Asks the Supreme Court to Overturn Quill

▪ Written by
On August 29, the Direct Marketing Association (DMA) submitted a certiorari petition to the U.S. Supreme Court asking the Court to review the Tenth Circuit Court of Appeals’ decision in Direct Marketing Association v. Brohl (Brohl II). The case already made one trip to the Supreme Court (Brohl I), in which the Court held that the Tax Injunction Act did not bar federal-court review of the case. On remand, the Tenth Circuit held that Colorado’s use tax reporting regime did not violate the Commerce Clause. (To refresh: Colorado’s regime requires out-of-state sellers to report sales to Colorado [...]Read more

Sales Tax Nexus Roundup – Introducing Louisiana and Tennessee

▪ Written by
We have been closely following the rapid rise of state laws and regulations imposing sales tax nexus or reporting requirements on out-of-state sellers with no physical presence in the state. In the wake of decisions by the U.S. Supreme Court and the U.S. Court of Appeals for the Tenth Circuit in cases brought by the Direct Marketing Association (see prior coverage), states have felt emboldened to enact provisions that challenge the Supreme Court's holding in Quill v. North Dakota, which demands that a seller have physical presence in a state before the state can require the seller to collect [...]Read more

Vermont Proposes Colorado-style Use Tax Reporting Law

▪ Written by
As we discussed in February, the Tenth Circuit upheld the constitutionality of Colorado’s use tax notification law with its decision in Direct Marketing Association v. Brohl (DMA II). In his concurrence to the decision, Judge Gorsuch predicted that “many (all?) states can be expected to follow Colorado’s lead and enact statutes like the one now before us.” (See Gorsuch, J., concurring, at 9). It appears that Vermont may be the first Colorado follower. Vermont is a seasoned player in the game of sales and use tax nexus and collection. In 2011, the state began requiring retailers who make [...]Read more

South Dakota Takes NCSL Challenge, Enacts Sales Tax Nexus Law

▪ Written by
In February, we discussed how the National Conference of State Legislatures (NCSL) circulated a letter to all the states encouraging them to enact laws to challenge the physical-presence standard for sales tax nexus articulated in Quill v. North Dakota. On March 22, South Dakota heeded the NCLS's call when Gov. Dennis Daugaard signed SB 106. SB 106 imposes a sales tax collection obligation on out-of-state sellers "as if the seller had physical presence in the state," provided that the seller meets one of two conditions: (1) the seller's gross revenue from taxable products or services delivered [...]Read more

States Continue to Challenge Quill’s Physical Presence Standard

▪ Written by
When a client calls us to inquire about sales tax exposure, we instinctively start asking questions about people and possessions: “Do you have property in other states? Where do you have employees? Have you sent any sales representatives to any states where you have made sales?” For decades, tax practitioners have known that a proper sales tax nexus analysis begins with physical presence. It’s black-letter law, after all. States can’t levy sales tax on someone who isn’t there. We know this because of Quill Corp. v. North Dakota and National Bellas Hess v. Illinois before it. [...]Read more

Connecticut Revenue Commissioner Suggests That States “Ramp Up” Economic Nexus for Sales Tax Purposes

▪ Written by
In a provocative op-ed published in the March/April issue of the Journal of Multistate Taxation and Incentives, the Connecticut Commissioner of Revenue Services (Kevin Sullivan) argues that given Congress’s apparent unwillingness to pass the Marketplace Fairness Act, the states should consider taking matters into their own hands and simply act as if Quill is no longer good law. The Commissioner appears to have been emboldened by Justice Kennedy’s concurrence in the U.S. Supreme Court’s recent decision in Direct Marketing Association v. Brohl, No. 13-1032, __ S. Ct. __ (Mar. 3, 2015), in [...]Read more

State & Local Tax ADVISORY: California Supreme Court Holds in Target That Consumers May Not Sue Under Consumer Protection Laws for Damages Resulting from Excessive Sales Tax Collection

▪ Written by
This advisory discusses Loeffler v. Target Corporation, which involved a claim for a refund of allegedly improperly collected sales taxes brought under California’s consumer protection laws, and how the California Supreme Court held that the refund scheme created by the California tax code provides the exclusive remedy for a dispute over the applicability of the state sales tax to retail transactions. The court’s holding closely followed the logic and policy reasoning outlined in an amicus brief filed in the case by Alston & Bird. The advisory is provided on the Alston & Bird website: www.alston.com/advisories/loeffler-target/  [...]Read more

“Technical” Revenue Laws Changes in North Carolina

▪ Written by and
On June 21, 2012, the North Carolina General Assembly enacted its annual updates and so-called technical revisions of the revenue laws. Session Law 2012-79. Affiliated Corporations. GS 105-130.2(a) is amended to add a definition of “affiliate” for all corporate income tax purposes. Originally, the corporate tax part referred to affiliate in two places: GS 105-130.6, which authorized correcting non-arms-length pricing between affiliates, and GS 105-130.5, listing the North Carolina adjustments to federal taxable income. Two of those adjustments were and still are adjustments for pricing [...]Read more

Tax Advisory: Outwit, Outplay, Outsourced: A Sales and Use Tax Survivor Guide

▪ Written by and
Attached is a link to a recently prepared State & Local Tax Advisory titled “’Outwit, Outplay, Outsourced’: A Sales and Use Tax Survivor Guide.” This article was originally published on May 7, 2012, in State Tax Notes, as part of Alston & Bird’s regular column “Audit & Beyond.” See 64 State Tax Notes 379 (May 7, 2012). When people hear or read about U.S. companies engaging in outsourcing transactions, their immediate reaction is negative because they envision those U.S. companies moving jobs overseas, most notably to India. Indeed, in 2004, [...]Read more