November 2, 2017

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AASA Signs Amicus Brief in South Dakota vs Wayfair

While AASA does not maintain counsel, we do from time to time engage in the Supreme Court process when a pending case has implications for public schools. Last term, we filed in the Endrew Case, related to special education. We just recently signed onto an amicus brief (from 'amicus curiae', which means 'friend of the court'), a process by which someone who is not a party to the case can provide information or context that bears on the case. A summary of the most recent amicus brief is below, written by Lisa Soronen, of the State & Local Legal Center. Her organization led the effort, which was also supported by the National School Boards Association and the National Association of Elementary School Principals, among others.

State and Local Legal Center Asks Supreme Court to Accept Sales Tax Case 

The State and Local Legal Center (SLLC) has filed an amicus brief asking the Supreme Court to agree to hear South Dakota’s petition in South Dakota v. Wayfair. In this case South Dakota is asking the Supreme Court to hold that states may require out-of-state retailers to collect sales tax. 

In Quill Corp. v. North Dakota (1992), the Supreme Court held that states cannot require retailers with no in-state physical presence to collect sales tax.

In March 2015 Justice Kennedy wrote a concurring opinion stating that the “legal system should find an appropriate case for this Court to reexamine Quill.” Justice Kennedy criticized Quill in Direct Marketing Association v. Brohl for many of the same reasons the SLLC stated in its amicus brief in that case. Specifically, internet sales have risen astronomically since 1992 and states and local governments are unable to collect most taxes due on sales from out-of-state vendors. 

Following the Kennedy opinion a number of state legislatures passed laws requiring remote vendors to collect sales tax. South Dakota’s law is the first to be ready for review by the Supreme Court. In September South Dakota’s highest state court ruled that the South Dakota law is unconstitutional because it clearly violates Quill and it is up to the Supreme Court to overrule it. In October South Dakota filed a certiorari petition asking the Supreme Court to hear its case and overrule Quill.   

The SLLC amicus brief makes two main points. First, it explains why this is the right case for the Court to take. In recent years numerous cases (and state laws) have challenged Quill at the margins. This case directly asks the Court to decide whether to overturn Quill without any distractions like factual issues. Second, now is the right time for the Court to consider overturning Quill because states and local governments are failing to collect billions of dollars in tax revenue annually at an increasing rate due to rising online sales.

The brief cites a study by the National Conference of State Legislatures and the International Council of Shopping Centers which estimated that in 2015, uncollected sales taxes from remote sales were almost $26 billion. Of this $26 billion, over $17 billion uncollected taxes were projected to be from electronic sales.    

At this point all South Dakota and its amici, including the SLLC, are asking the Supreme Court to do is agree to hear this case. Supreme Court review is discretionary; four of the nine Supreme Court Justices must agree to hear any case. If the Supreme Court refuses to do so, the South Dakota Supreme Court ruling that South Dakota’s law is unconstitutional will stay in place.  possible the Court could hear this case this term meaning it would issue an opinion by the end of June 2018.    


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