Thursday, July 10, 2014
HMB's David Hughes Quoted in Law360 Story
"In 'Amazon Tax' Case, Justices May Dodge E-Retailer
Excerpt from Law360, Friday, July 2,
Supreme Court will likely clarify when state tax collection
methods can be challenged in federal court when it hears an appeal
related to Colorado's "Amazon tax" law, but the more divisive
question of when a state can force out-of-state Internet retailers
to collect sales tax will probably go unanswered, experts said
Under current law, an attempt to collect sales tax from an
out-of-state vendor without Congress' blessing would violate the
U.S. Constitution's Commerce Clause, the U.S. Supreme Court ruled
in 1992 in Quill Corp. v. North Dakota.
As a result, online retailers only collect sales taxes in states
where they have a physical nexus - some kind of brick-and-mortar
operation, such as a warehouse, storefront or office building.
States and local businesses say that this system gives online
retailers an advantage because customers can avoid paying sales
"I don't believe the Supreme Court took this case to expand
Zelinsky, a professor at the Benjamin N. Cardozo School of Law]
said. "Every time the court gets a petition to rethink
Quill, the court says no. I'm convinced that with this
court what you see is what you get. They saw a bunch of circuit
courts coming to different decisions on the scope of the Tax
Injunction Act and that is the classic case when the Supreme Court
Hughes, a partner at Horwood Marcus & Berk
Chtd., agreed with Zelinsky's assessment and said it's highly
unlikely the court will touch its previous holding in
Quill. Although Hughes cautioned that the [Direct
Marketing Association] would have to be careful in how it argues
the case, he said there is an argument to be made that the TIA does
not bar its action.
"Don't get your hopes up for an exciting decision as far as sales
tax collection," Hughes said.
"I don't see the Supreme Court getting to the merits," he said.
"The reason the Supreme Court took the case was to provide an
opinion on the scope of the Tax Injunction Act."
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Reprinted with permission.