NetChoice in the News
“I think that gets to the root of what we’re saying,” NetChoice Executive Director Steve DelBianco told reporters April 27. He said a state imposing rates, rules and audits “needs to be a regime where I have a physical presence allowing me to have some say in my state government and in my regulations.”
Steve DelBianco is on the shameless side. He leads NetChoice, a national trade association representing e-commerce and online businesses.
“Massachusetts has this unique theory of electronic presence,” DelBianco said. “But under that theory, your business is subject to the taxation [and] regulation in any state where a user simply enters your website address. That can’t hold up to legal scrutiny, ’cause it certainly doesn’t hold up to common sense.”
For DelBianco, the only option left is a legal challenge to fight the idea that a cookie on your computer is the same thing as a storefront on Newbury Street. He said his group has sued a number of other states for online sales tax laws and he’s looking at a legal fight in Massachusetts too.
“We’re researching the legal arguments and raising the funds to pursue a lawsuit right now,” DelBianco said. He said it’s “too soon to say when we’ll be ready.”
Online trade associations, including CompTIA, the Internet Association and NetChoice, also met with Hastings to voice opposition to the measure.
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Technology has given us more freedom to choose the way we work, live, travel, and shop. But many Americans are hitting bureaucratic roadblocks on their way find full-and part-time work with peer-to-peer services like Lyft, Postmates, and Handy. These roadblocks are not just bad for workers, but also for consumers, commerce, and the tax revenue that comes with it.
Some of these roadblocks are intentionally created by incumbents trying to prevent competition. But others are just legacy rules and laws that impede the fast-moving trend of workers moving into more flexible, freelance forms of employment.
Fellow drivers in Seattle are in danger of losing many of the freedoms that make ridesharing so appealing. Drivers no longer would be able to work when, where and how long they want. They could be forced into legally binding agreement that mandate minimum or maximum working hours and limit their shifts to certain days or set times.
The Department of Revenue and Plaintiffs, American Catalog Mailers Association and NetChoice jointly requested the court’s order to limit uncertainty in the marketplace while the case is pending.
During an April event co-hosted by Bloomberg BNA and Reed Smith LLP, NetChoice Executive Director Steve DelBianco characterized the New York effort as “Batman Returns,” with Cuomo attempting to jam through the bill.
“But the Justice League prevailed,” he said.
Some legislators in Colorado are also raising privacy concerns, vocalized by retail groups like NetChoice Inc., arguing consumers might not like it that information about their online purchases—including total amounts spent, shipping addresses and billing addresses—is forwarded to the state.
There is no end in sight for legal challenges to state government efforts to tax remote sales. The latest involves a lawsuit that Bloomberg made available online, filed by NetChoice and the American Catalog Mailers Association.
Under that change, the state would be “educating instead of penalizing consumers,” Amy Stephens, principal in the public policy and regulation practice at Dentons in Denver, told Bloomberg BNA April 17. Stephens is a lobbyist representing NetChoice, a prime advocate of the bill to remove the reporting requirement.
We addressed that case most recently last month, at which time we also noted that a NetChoice executive criticized Colorado’s sales tax notice and reporting requirements, which were challenged but ultimately upheld in Direct Marketing Association v. Brohl, as “tattle-tale.”
“You are going to unleash a crimson tide of federal legislation by overturning Quill,” Steve DelBianco, executive director of NetChoice, a coalition of e-commerce companies and trade groups, said. “Overturning Quill unleashes the states to pursue no simplification whatsoever and to send auditors to every corner of the country.”
“In granting this injunction, the Tennessee court matched the reasoning in South Dakota’s court, holding that a bald-faced challenge to 150 years of federal doctrine cannot be enforced until lawsuits are concluded,” Steve DelBianco, executive director of NetChoice, told Bloomberg BNA in an email.
“State lawmakers and regulators might think they can flout the constitution and Supreme Court with impunity, but these court rulings provide a much-needed reality check,” he added.
Chancellor Russell T. Perkins on Monday granted the joint request to bar enforcement of Tennessee’s Rule 129 until final judgment on the challenge from the American Catalog Mailers Association and NetChoice, which represents online retailers like eBay, Overstock and PayPal.
That’s right, Tennessee’s efforts towards enforcing economic nexus for remote/online retailers has been put on hold as the parties have entered into an agreed order to prevent the Department of Revenue from enforcing the new regulation while the challenge filed by the American Catalog Mailers Association and NetChoice works its way through the Tennessee Courts and potentially beyond. (Davidson County Chancery Court No. 17-307-IV.)
“Hiring attorneys to write privacy policies, coming up with terms of service – that will be a real burden for small businesses,” Carl Szabo, senior policy counsel at the tech trade group NetChoice, told The New York Times.
TO CLARIFY: Morning Tax reported on Monday that one key opponent of federal online sales tax legislation believed that the National Conference of State Legislatures’ estimate that $26 billion worth of sales tax from remote sales weren’t collected was over the top, with a more feasible finding being at most $11.6 billion. But Steve DelBianco of NetChoice, who came up with that projection, believes a more likely figure is $5.2 billion. So in short: Supporters and opponents of allowing states more latitude to force out-of-state vendors to collect sales tax continue to have wildly different projections about how big the problem is.
Also of interest: The Colorado Senate Finance Committee holds a hearing today over a measure to repeal a law that forces out-of-state companies to inform the customers about sales taxes owed, a law that wound its way to the Supreme Court.
The administration’s unique legal theory is “too clever by half,” Steve DelBianco, the executive director of the trade group NetChoice, said in an email Tuesday.
“The Supreme Court said that out-of-state sellers who mailed ‘an avalanche’ of catalogs into North Dakota could not be forced to pay the state’s sales tax,” he said of the 1992 decision. “So how in the world can Massachusetts deny that this ruling applies to e-retailers, who merely post a website that may be requested by Massachusetts consumers?”
DelBianco expressed hope that “state lawmakers will realize this DOR directive is headed in the wrong direction, by inviting lawsuits while bringing in no new tax revenue.” The administration has projected the tax will bring in $30 million a year in additional revenue.
The reference to litigation is likely no idle threat on the part of NetChoice. The organization has brought lawsuits in South Dakota and Tennessee against similar taxes implemented by those states in recent years. South Dakota was forced to file lawsuits against three major retailers, including Boston-based Wayfair, after they did not register with the state to collect sales taxes.
Asked if NetChoice was prepared to sue Massachusetts, DelBianco indicated that if that group did not, someone else could. “Too soon to say whether we would be the ones to sue Massachusetts,” he said. “We have lawsuits in progress already in South Dakota and Tennessee, and there are plenty of potential plaintiffs to go around.”
NetChoice and the ACMA’s lawsuit against Tennessee’s rule asserts that it is “plainly unconstitutional” as it “violates the Quill physical presence requirement, usurps the role of Congress in regulating interstate commerce, and unlawfully expands the State’s taxing authority over companies, individuals, and organizations located throughout the United States, and potentially the world, based solely on their having customers in Tennessee.” The groups ask the court to bar enforcement of the rule.
Steve DelBianco, executive director of NetChoice, told Bloomberg BNA April 4 that the groups had to pursue an administrative challenge before filing the lawsuit.
DelBianco told Bloomberg BNA that “[f]urther economic nexus challenges are simply unnecessary now that this is headed to the highest court of the land, wasting taxpayer dollars while eroding respect for the legal system and, in fact, our entire system of government.”