BNA Bloomberg - Digital Sales Tax Bill Set for House Subcommittee Hearing

“We’re relieved to see that Congress is waking up to the problems caused when states reach across borders to regulate and tax businesses in the country,” Steve DelBianco, executive director of NetChoice, told Bloomberg BNA in a July 18 email. “It’s reached a crisis in the area of remote sales tax, where states are creating chaos with unconstitutional and illegal regulations and laws.”

Several e-commerce trade associations applauded the hearing announcement.

“Sensenbrenner’s bill deserves attention because it has the potential to hit the pause button on state cross-border regulation, so that Congress can exercise its constitutional authority over interstate commerce,” DelBianco said.

“In recent years, rogue states have attempted to target out of state businesses to comply with onerous tax collection regimes that ran afoul to the Supreme Court precedent,” Hamilton Davison, president and executive director of the American Catalog Mailers Association (ACMA), said in a statement. “We applaud the U.S. House Judiciary Committee for holding this hearing and proposing much-needed solutions like Rep. Sensenbrenner’s No Regulation Without Representation Act.

“It’s a sound piece of legislation that would provide clarity and regulatory relief for remotely located catalog and e-commerce businesses that sell their products nationally,” Davison said.

An increasing number of states have passed legislation or regulations in recent years to challenge the Quill rule and enforce taxes on out-of-state sellers. NetChoice and ACMA are parties in several legal challenges to states’ remote sales regimes, including South Dakota, Indiana, Tennessee and Wyoming.


BNA Bloomberg - Ohio ‘Cookie Nexus’ for Online Sales Tax Likely to Crumble

NetChoice and the American Catalog Mailers Association “are researching legal arguments and raising funds to challenge Ohio’s new remote sales tax law,” Steve DelBianco, executive director of internet commerce trade group NetChoice, told Bloomberg BNA through email. “If the state has violated Supreme Court precedent and the Internet Tax Freedom Act, we look forward to our day in court. Moreover, we don’t see how a court will agree that electrons flowing into a computer or smartphone can possibly create a ‘physical presence.’”

NetChoice and ACMA recently sued and prevailed on procedural grounds against a similar Massachusetts directive. That directive worked in a similar way to create a tax based on physical presence in the state proven by cookies installed on computers or phones.


Pioneer Institute – The Internet Sales Tax: Gone But Will It Be Back?

Pioneer Institute – The Internet Sales Tax: Gone But Will It Be Back?

Not everyone agreed with the DOR’s definition of physical presence. After the directive was issued, two business advocates NetChoice and the American Catalog Mailers Association (ACMA) mounted a legal challenge to it. After initial arguments were presented, the DOR pulled the proposal.


Business Advocate – North Carolina: Remote sales tax bill stalls

Business Advocate – North Carolina: Remote sales tax bill stalls

On April 30, 2017, Netchoice sent Gov. Holcomb a letter asserting that HB 1129 “will be seen by Indiana consumers as a new tax and could erode your ability to protect Indiana businesses from out-of-state tax collectors” because it “encourages other states to create similar laws that would impact Indiana sellers.”

Netchoice asserted that Indiana’s HB 1129 would also

  • Rely on new revenue extracted from Indiana residents – not from out-of-state businesses.
  • Generate only minimal new tax revenue.
  • Establish a new tax regime that is anything but equal, consistent, or fair.

Citing its own poll of Tennessee residents on a similar tax there, Netchoice contended that 56 percent of those residents said that “requiring them to pay tax on online purchases from out-of-state businesses would be a statewide tax increase.” Netchoice opined that it would “likely see similar results in a poll of Indiana citizens.”

Bolstering its position with a reference to the case South Dakota v. Wayfair Inc. et al, Netchoice promised that the same outcome, the court’s dismissal, would occur, which would not only prohibit Indiana from enforcing the law on out of state retailers, but force Indiana to “fritter[] away tax dollars on an unnecessary lawsuit” that it is bound to lose anyway.

Furthermore, Netchoice declared, the new tax would not actually generate new revenue, because most of the top e-retailers, like Amazon, already collect in Indiana, and what little new revenue would come in is not enough “to justify the legal costs and erosion of state sovereignty.”

Nor does a remote sales tax law level the playing field between retailers located within and outside the state, argued Netchoice. Instead, “HB 1129 foists disproportionate collection burdens on catalog and online retailers. When a customer enters a gift shop in Indianapolis, the store does not ask for that customer’s home address so she can look-up the tax rate and later remit the tax to the customer’s home state.”

Ultimately, Netchoice made a threat which, given its activity in this area, is not so empty: “We ask that you remove the remote seller tax collection language from HB 1129 and protect Indiana businesses from out-of-state tax auditors, protect Indiana citizens from a new tax, and avoid costly litigation the state is likely to lose.”


BNA Bloomberg - Washington’s Marketplace Sales Tax Law Heading for Battle

“We definitely anticipate a legal challenge,” Steve DelBianco, executive director of the e-commerce trade association NetChoice, told Bloomberg BNA July 10. “NetChoice and the American Catalog Mailers Association are now developing legal arguments and raising funding for a lawsuit.”

DelBianco said Washington’s $10,000 threshold is particularly problematic, calling it “a significant burden on America’s small businesses. Washington’s new law reaches the tiniest of businesses anywhere in the country if they happen to have customers in Washington state.”

Washington’s imposition of tax and reporting requirements on marketplace facilitators “would be unique, since these facilitators are not the seller of record,” DelBianco added. He accused the new law of targeting facilitators and marketplaces in what amounts to discrimination against electronic commerce, which is prohibited under the Internet Tax Freedom Act.

“We’ll also challenge the privacy violations that this would bring on Washington residents, as the state would now be collecting data on their personal and sometimes sensitive Internet purchases,” he said.


Forbes - Amazon Prime Day Deals Aren't Tax-Free In 2017

NetChoice, a trade association of Internet companies and organizations, and American Catalog Mailers Association (“ACMA”), a trade association representing the interests of companies, individuals, and organizations engaged in and supporting catalog marketing, disagreed. In June, the two organizations filed suit to stop the new rule from taking effect. Among the arguments in the lawsuit were allegations that the Commonwealth had not followed proper procedures with respect to the directive.

The rule, which was expected to take effect on July 1, 2017, was eventually revoked. However, it’s not completely buried. I fully expect to see it again after some procedural tweaks. And other states are watching closely to see what happens. If the revised rule successfully moves forward, it could change the way that state revenue departments view – and tax – online sales from out of state retailers.


Don't Mess With Taxes - Amazon Prime Day and Washington's new marketplace, tattle-tale law shine spotlight on online sales tax collection

NetChoice, a trade association focusing on electronic commerce, reportedly is developing legal arguments and rounding up money to challenge the plan.

“Washington is not likely to see any new revenue from this law, since a court would bar enforcement while legal challenges are resolved,” Steve DelBianco, executive director of NetChoice, told the Tacoma News-Tribune in an email. “So nobody in Olympia should be counting on new tax revenue in the near term.”


Small Business Advocate Radio – Why Massachusetts bailed on remote sales tax collection

Why Massachusetts bailed on remote sales tax collection

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BNA Bloomberg - Indiana Caught in Web of Digital Sales Tax Lawsuits

The complaint filed by Washington-based NetChoice and the American Catalog Mailers Association (ACMA) asks an Indiana trial court to strike down the state’s recently passed gross retail tax that applies to sellers without a physical presence in the state ( Am. Catalog Mailers Ass’n. v. Krupp , Ind. Super. Ct., No. 49D01-1706-PL-025964, complaint filed 6/30/17 ).

“We are confident that the court would grant an injunction barring enforcement of the Indiana law, just as a South Dakota court did in March by invalidating a nearly identical law there,” Steve DelBianco, executive director of NetChoice, told Bloomberg BNA by email. NetChoice, along with the ACMA, has also sued South Dakota and Tennessee over their remote sales tax regimes. They withdrew litigation in Massachusetts after the state revoked a directive ordering digital retailers to begin collecting state sales tax.


BNA Bloomberg – Wyoming Boots Up Online Sales Tax Lawsuit, Joins Four Others

BNA Bloomberg – Wyoming Boots Up Online Sales Tax Lawsuit, Joins Four Others

Steve DelBianco, executive director of NetChoice, said Wyoming won’t be able to compel online retailers to collect the tax while the case is litigated. The law originally required retailers to commence complying on July 1.

“By operation of the underlying statute, enforcement of the law is enjoined during the pendency of the litigation,” DelBianco told Bloomberg BNA through email.

The dispute in Wyoming mimics a battle in South Dakota involving a nearly identical statute. Under S.B. 106 (codified as S.D. Codified Laws Chapter 10-64), nexus is triggered for remote retailers with annual in-state sales exceeding $100,000 or 200 separate transactions. South Dakota’s law has been attacked by many of the same online retailers named in Michael’s lawsuit. The state’s Sixth Judicial Circuit Court found the law unconstitutional under Quill, and the matter is now before South Dakota’s Supreme Court.

The Wyoming lawsuits broaden the battle over internet sales taxes, with other lawsuits pending in Alabama, Indiana, and Tennessee.