States Win, Online Retailers Lose as Supreme Court Alters Sales Tax Collection Standard
With last week’s South Dakota v. Wayfair decision, the U.S. Supreme Court overturned its 1992 decision in Quill Corporation v. North Dakota, which limited a state's ability to impose its sales tax on an out-of-state retailer. The Quill decision is one of the main reasons why many e-commerce retailers did not have to collect sales tax for sales to out-of-state residents.
In recent years, write Venable attorneys Walter Calvert and Tammara Langlieb in a recent client alert, states have tried all sorts of means to circumvent the Quill standard, including "economic nexus" laws that intentionally flout Quill’s physical presence requirement by asserting nexus – or a "sufficient connection" with the state – based on the number and/or dollar amount of sales into the state.
South Dakota's economic nexus law was at the heart of the Wayfair case. The majority opinion, authored by Justice Kennedy, lists three aspects of South Dakota's tax system as features that "appear designed to prevent discrimination against or undue burdens upon interstate commerce." The Wayfair case now returns on remand to the South Dakota Supreme Court to be implemented. Many years of further proceedings can be expected across the 45 states that impose sales tax, as unique situations in the states' economic nexus laws are tested against the standards of the Wayfair case.
Congress Takes TCPA Action: Clarifying or Confusing?
Following confusion in both the courts and the Federal Communications Commission (FCC), Congress is now looking to step in and resolve disputed provisions of the Telephone Consumer Protection Act (TCPA). After the decision in ACA International v. FCC earlier this year, in which the DC Circuit set aside key provisions of the FCC’s 2015 TCPA Order, courts have found addressing TCPA issues to be mission impossible.
Courts are split over whether the FCC’s prior 2003, 2008, and 2012 orders are still valid or the DC Circuit’s decision also vacated those rulings, and this lack of clarity compelled the FCC to issue a public notice seeking comments on how to define ATDS and address other issues that the DC Circuit raised, writes Venable partner Dan Blynn in a recent blog post. However, recent action by Congress could provide clarity to all parties involved. H.R. 6026, the Stopping Bad Robocalls Act, would create a final TCPA definition for “robocall” and create a national database for reassigned numbers.
FTC Publishes Guidance on Online Giving Portals
Although the Federal Trade Commission (FTC) lacks jurisdiction to regulate legitimate charitable organizations directly, it can – and does – regulate the activities of for-profit entities that help charities with their fundraising activities, write Venable attorneys Eric Berman, George Constantine, and Rachel Provencher in a recent client alert. The FTC's recent attention to online giving portals reflects its recognition that charity fundraising is gravitating toward the use of newer platforms that may raise consumer protection issues similar to those that arise with traditional fundraising methods, such as telemarketing and direct mail.
From the Tool Kit
Commercial co-ventures, in which a marketer makes a donation to a charity based on the sale or use of a product or service, are popular with consumers, marketers, and charities. In the most recent edition of the firm's Advertising Law Tool Kit, Venable partner Melissa Landau Steinman provides best practices that marketers and their nonprofit partners should keep in mind to avoid running afoul of state and federal laws.
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