U.S. Supreme Court takes up state sales tax dispute; Haslam and Slatery hopeful

Gov. Bill Haslam and state Attorney General Herbert Slatery are both hailing the U.S. Supreme Court’s decision to hear arguments in a case they hope will authorize states to require retailers to collect sales taxes even if they have no physical presence within the state, reports the Times Free Press.

The Republican governor “is encouraged that the Supreme Court has agreed to hear this case and looks forward to the court’s decision,” said Haslam press secretary Jennifer Donnals. “He believes it is unfair to disadvantage brick and mortar retailers in Tennessee against out-of-state, online retailers.”

Last week, the nation’s highest court agreed to revisit its 26-year-old ruling in a South Dakota case that eventually helped turn most internet commerce into a tax-free zone.

Tennessee Attorney General Herbert Slatery joined with Republican and Democratic colleagues from 33 states, including Alabama Attorney General Steve Marshall, in filing a friend-of-the-court brief in support of getting the Supreme Court to revisit the 1992 ruling known as Quill.

“We are pleased the Supreme Court has granted the petition and we will continue to support South Dakota’s efforts,” said Slatery spokesman Harlow B. Sumerford. “As we have stated previously, our hope is that the Court will level the playing field for the brick and mortar businesses in Tennessee.”

Quill held that states could not compel catalog companies and similar out-of-state firms to collect sales taxes if their operations had no actual physical presence in a state such as a store.

Because it involves interstate commerce, that’s the purview of the federal government, justices said at the time. Since then, internet commerce has not only come into existence but exploded, putting many traditional brick-and-mortar retailers back on their heels.

According to the Government Accountability Office, internet commerce in 2017 was estimated to cost 45 states, as well as local governments, between $8.5 billion and $13.4 billion in lost sales tax revenue.

…(I) in Tennessee, Haslam’s Revenue Department issued a rule in 2016 to begin collecting sales taxes. Associations for online retailers and catalog companies last year filed a legal challenge in Davidson County Chancery Court to Tennessee’s rule.