Knowledge Center

Wednesday, July 01, 2015

HMB's Jordan Goodman Quoted in Tax Analysts on Challenges Surrounding Adapting Nexus Laws to a Changing Economy

"Experts on Nexus Issues: The Ball Is in Congress's Court"

Tax Analysts, July 1, 2015

By Eric Yauch

Speaking at the Institute for Professionals in Taxation's 2015 annual conference in San Diego June 29, Jordan Goodman of Horwood Marcus & Berk Chtd. said that Justice Anthony M. Kennedy's concurrence in Direct Marketing Ass'n v. Brohl 2015 STT 42-10: Court Opinions calling for a challenge to Quill's physical presence nexus standard should signal to Congress that it needs to speak on the issue.

As states vary their sales tax nexus laws to adapt to a changing economy, Kennedy is warning Congress that if it does not act soon, the Court will, Goodman said. He characterized Kennedy's message as saying, "Congress, get your butts in gear, don't make us decide."

The Direct Marketing Association challenged Colorado's use tax notice and reporting requirements imposed on out-of-state sellers that do not have sales tax nexus because they lack a physical presence in the state. The case went to the U.S. Supreme Court when the Tenth Circuit declined to hear the case based on the Tax Injunction Act. The Supreme Court held March 3 that the case could proceed in federal court.

Now that the case is back at the Tenth Circuit on the merits, Goodman said that the Colorado reporting statute is problematic. "How do they enforce it?" he said. "They're going to penalize you, and they're using the threat of a penalty to make you perform a behavior that you're not arguably required to perform."

...Goodman...said that with states and Congress considering sourcing laws, the taxation landscape is almost certain to change.

"Don't be tied to your historic methodology used to determine where sales are sourced, particularly [tangible personal property], because the world is changing, and changing rapidly," Goodman said.

Copyright 2015 Tax Analysts. Reprinted with permission.

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