NetChoice in the News
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.
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 – 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.