tv South Dakota v. Wayfair Oral Argument CSPAN April 21, 2018 2:51am-3:53am EDT
>> you will hear arguments in case 17494, south dakota versus wayfarer. >> mr. chief justice, may it please the court, there are two very significant consequences brought about by quill. first, our states are losing massive sales tax revenues that we need for education, healthcare and info structure. second, our small businesses on main street are being harmed because of the unlevel playing field created by quill where out-of-state remote sellers are given a price advantage.
>> i'm sorry, isn't the problem not quill? but the fact that you don't have a mechanism to collect from consumers quest markets not the merchants paying the sales tax, it's the consumer. they are collecting it for you. so, find a way to collect from them. >> we believe we have a right because we have a statutory team in place. it's a fair scheme, it has safe harbors in place to allow our state. >> i'm not concerned about your scheme as such. i'm concerned about the many unanswered questions that will be creating a massive a amount of lawsuits. i know you told us they created lawsuits, i guess every state does. here's there's some significant ones.
you are not retroactive but your adversaries point out that there are many states who have already made this retroactive. we have that question. we have questions about what's the contact that you have to do to impose this obligation. are we going to decide it under pike balancing, how much contact is enough to justify placing this obligation on an out-of-town sale? there will be a host of questions, what happens when the tax programs breakdown, as it already has the states that are using it, and merchants can't keep track of who they sold to. all of these are questions that are brought with difficulties. your introducing a whole new set of difficulties to put behind something that's been in place for 30 years now.
>> we would encourage using the doctrines that are already in place with complete auto when it comes to a tax assessment for discrimination and substantial nexus. >> how about economic. >> it can certainly be addressed by a balancing test used for the commerce clause. it's able to take a look at the actual. >> so how many sales does it take. >> you are at 2200 sales, i don't remember the monetary amount. what's the minimum? >> in south dakota it set at 200. >> i know what it was set at. it doesn't answer the question. what's the minimum everywhere else. >> the minimum would be one sale. if you look at complete auto, that creates the nexus. >> what is the cost that your input on small businesses question. >> the small businesses are the
ones affected most by will. if you look at the small business on main street that business is put at a price disadvantage because of quill. >> actually there put it disadvantage by the fact that there are massive discount sellers not just on the internet but even stores. i'm talking about the added cost of doing business. they said it was a 250 million-dollar cost. it begins at $12 a month for 30 transactions. when you look at the cost associated with collection, it really depends. >> that doesn't include audit auditing or integrating the program for the company.
it doesn't account for the maintenance of the program. there's a lot of costs that are inherited. one thing to look at is the fact that all these sellers, at least in the 45 states with the sales tax already have a collection and a remittance obligation and already have in place the software that is able to calculate. >> i'm sorry, there's five states that don't centralize, with those five states as indicated from the briefing is to scale. it begins at $12 a month for 30 transactions. i think the important thing to look at is that it doesn't address the issue with the quill and put physical presence. it's shown in national geographic, you may have a situation where there's a warehouse where it will still trigger the sales tax obligati
obligation. some businesses could not impose the obligation on some small businesses. >> mr. chief justice, certainly that's what it's for to determine a balancing if there is a concern. >> other areas you just mentioned, i don't know that we recognize a level for things like a physical presence. isn't one person, one building? that would be another special rule in this context. >> certainly that's one way to look at it. when you look at the burdens and look at physical presence there's a lot of things that can trigger it. it can be a building, warehouse, a traveling salesperson that comes to visit. the other important thing when it comes to burden is the states
that are being put in place such as colorado with the notice and reporting requirement, those are burdens of equal or perhaps even greater than a simple collection and remittance of attacks. >> if there's two options, let's say option a is eliminate quill and states can do whatever they want with respect to liability and the minimum number of sales required in the state for the sales to be taxed. that's option eight. if those are the only two options, what are the reasonable option. >> option eight. congress has had 26 years to address this issue, it was
striking down our state statute. >> generally when they say something like that the congress has not addressed an issue for 25 plus years. it gives us reason to pause because congress could have addressed the issue and congress chose not to. this is not the kind of issuer you say well, we probably didn't get on congress' radar screen or maybe congress was too busy doing of other things but this is a very prominent issue that congress has been aware of for a long time. he has chosen not to do something about that. that seems to make your bar higher. >> this is a constitutional interpretation. one way to look at congress and what was just announced by the court today, the microsoft decision. sometimes the activity of this court will spur congress to act. it did in the microsoft situation, but in this instance
it hasn't. >> microsoft was just a defective story interpretation, but here i think your point is right or wrong, was this court's decision and if time has changing conditions that have been rendered obsolete, we will let congress fix up what turns out to be our out obsolete precedent. >> it is. >> is in it normal that we treat the commerce clause the same way we treat statutes. congress cannot overturn constitutional decisions, but in the dormant case it's different. of course they can and they do. i don't really see a difference there.
>> justice, i would still say there's a difference because this is a constitutional. >> but the word constitutional is not magic. the wor the reason we say we are more willing to overturn a constitutional case is because congress can't act. so here they can act and therefore there is no reason for treating it special. what is the response to that. >> i think the reason to treat it special is because we have a situation where congress has had 26 years. we have heard from three senators that said congress was about to act and indeed what stop them from acting was our decision to decide this case. that's their view and whether they know or whether i know, i guess they have a better view. they are members of congress and they point to many statutes and you are 50 states, if you do not have the power to get congress to do something, i don't know who would.
>> congress doesn't have an incentive to take action as something that could be perceived as a tax when yet they don't get the opportunity to use the revenue. >> it seems that both the states and internet retailers have an incentive to ask for a congressional solution to this problem so the internet retailers will have to deal with statutes like the colorado reporting statute and with aggressive's moves by the states to try to bring taxation within will in some way and the states obviously have an incentive to require retai internet retailero collect the tax bread there are incentives on both sides but if quill is overruled, what incentives to the states have to ask for any kind of congressional legislation? >> certainly, if quill is overruled the states will have their constitutional responsibility to follow complete auto and to follow
pike. what happened is this court set the default, it set the baseline so is where state statute has nondiscriminatory's, it may be that it's reasonable or it may be automatically unconstitutional and struck down. >> can i ask you the question that two or three brief questions, you answer them when you wish and if you wish. the reason i'm asking like this is because i read through these briefs and i thought absolutely right and then i read through the other briefs and i thought absolutely right. you cannot both be absolutely right. so why is it. you have wildly different estimates of costs, revenues and whether states are losing or not. and other things. can you do this on the internet? they say there's 12 mistakes even in south dakota, or not. that's question one. how i find out. do you have a list here of six or eight really tough, practical
decisions wrecke retroactivity,l kinds of things like that. how we deal with that? i would like to know the answer to that. you've already dealt with one. i'll put it specifically, what's the standard. the government says physical presence, any? >> those are my three questions anytime you want to deal with them, please do so. >> it's a hundred billion dollars over the next few years. we know that wayfarer collects in 22 states. now they collect and others dates. they do this use that of course you can do this. there no longer a defendant because overnight they simply switched over.
when it comes to retroactivity, the states don't want to address this retroactively. that's why south dakota indicated we are perspective only. in the briefing 38 other states indicated their law would prevent retroactivity. >> that is something they could take care of if we overturn quill. >> absolutely. >> in terms of the economic impact, it's a suggestion that this is a problem that has peaked and that the bigger e-commerce companies are finding themselves with physical presence. they are already covered. the workarounds that some of the states have employed are also bringing more in. if it is a problem that's diminishing rather than expanding, why doesn't that suggest there are greater significance to the argument that we should leave quill in place. >> mr. chief justice because i think it's because of
e-commerce. it's now a major percentage of the market and rapidly growing. it's been challenging the states to collect on that. >> sure, e-commerce is expanding and companies like amazon account for a large part of that, but they're already collecting in all 50 states. that's the problem. it's not that e-commerce is expanding. from your point of view the point you have to address is that the coverage in terms of collecting the taxes is expanding as well. >> mr. chief justice, certainly it's expanding, but what remains is that 100 billion-dollar loss over the next ten years. mr. chief justice, if i may please reserve the remainder of my time. >> thank you counsel. >> thank you. >> mr. stewart. >> mr. chief justice, may it please the court. a bike to make brief points
about the wisdom of leading this matter to congress but i want to make the point that whatever this court decides, whether it overrules or leaves those in place or does something in between, congress can act. congress can impose whatever solution it believes is appropriate and indeed if states are given greater latitude to experiment in this area, to devise different schemes for out-of-state retailers against the interest of consumers within the state brick-and-mortar retailers, states own interest in requiring funds, if states can experiment congress will have a wider variety of models to look at and decide what aspects it would like to choose for the second thing -- >> that doesn't do anything for the interim. and for the dislocation and lawsuits until there is a
congressional decision. >> the second thing i would say is that has come to be understood that an out-of-state retailer cannot be made to collect state sales tax unless it has employees or physical facility within the state. that's the meaning that's been attached to the phrase physical requirement that the court used but i think it's very clear that it was not issuing inadvertent holding about the role of the internet presence in determining accompanies obligation to collect state sales tax for the court was dealing with the summarized rule of if this date retailers only have goods and catalog by mail or common carrier, that was insufficient and the court used that physical requirement term as shorthand for that principal. the court was not saying anything one way or another about the role of a pervasive
internet presence in establishing contacts with the state to allow for the collection or rough analog might be that in the past 15 years this court has sometimes acknowledged that its prior decisions had used the word jurisdictional in a less than precise manner and the court has sometimes said statutes that we previously characterized as jurisdictional are not really that. they are something else. to be sure, lower courts during the interim were wary of rejecting this court's statement that a particular statement was jurisdictional even if it seemed to be on thinking. the court didn't feel obligated to go through the steps of decided whether the standard for overruling had been established. it simply said we used the wrong shorthand, we were not wrong as to the substance will go from there. >> do you believe there is a
minimum so that a small business using it may have greater burdens than amazon and for they have a claim under your position or any micro business if you have an out-of-state retailer who is selling a particular physical good within the state that is a sufficient basis for subjecting that retailer to the tax collection obligation in the same way that if that single good turned out to be defective the state could be subject, i'm sorry the retailer could be subject to regulatory burdens enforced by the state and could
be pulled into court. >> is about the very kind of question that congress is equipped to deal with, establishing the minimum. >> certainly the fact that we don't think there's a constitutional minimum doesn't mean it wouldn't be a good idea and i wouldn't hinder congress ability to decide that amendment. >> isn't that essentially reason why we should leave this to congress? in other words, from this courts perspective the choices just binary. you either have the rule or you don't, but congress is capable of craft and compromise and trying to figure out how to balance the wide range of interest involved. now, the general said congress hasn't done that, but again, congress can decide when it wants to craft a compromise and when it doesn't want to craft compromise and then congress, if
it decides it wants to craft a compromise can craft a compromise in ways that we cannot. >> i would certainly agree that congress has a broader range of options available to it and does the court and an ability to devise a more nuanced solution. i don't think, with respect to characterize the choice before the court as binary, that is although it would not be our preferred constitutional rule, it would be open to the court to say physical presence in the form of employees or physical fill engine facilities within the state is not an ironclad requirement and yet not go as far as we've advocated namely one within the state is sufficient. >> one thing the court could do, as it often does say is that will look at the statute before us, we will decide whether the nexus that south dakota has required in the form of economic context within the state as a prerequisite to the tax collection duty, that is constitutionally sufficient and the court could leave for another day and for congress the question should a lesser link be
sufficient. >> part which i really think we can do after reading these briefs is where they put up a certain sector which i'm sensitive to which is that we have four or maybe five giant potential retailers in the country. i mean there could be a very small number selling virtually anything, and they sell over the internet in the hope of preventing oligopoly which is small business which finds it easy to enter. now, you raise with this entry barrier and they say a lot and you say a little. i don't know if it's a little or if it's a lot. and, if it is a lot, there might be ways of putting minimums in that would in fact preserve the possibility of competition and
the possibility of new entry, stopping the entry barriers from raising too high. that's something the antitrust division could testify about but they're not going to testify here. that is the kind of problem that worries me. >> let me say two or three things. the first is that the gao report said that the biggest retailers have big companies but not just the four or five biggest giants. how far down the mind you go. our frontline answer is the commerce clause doesn't entitle a business for the ability to make a profit if the obligation to collect sales tax in various states pushes it from making a profit to sustaining a loss. that's not a constitutional defect. no one on the other side is
really contending that the south dakota law places exorbitant burden and no one on the other side is contending that if every state did exactly what south dakota has done that the burdens would be exorbitant. >> it's obviously a test case. it was devised to present the most reasonable incarnation of this scheme. do you have any doubt that states that are on the edge of insolvency and municipality emma which may be in even worse position have a strong incentive to grab everything they possibly can. >> and certainly, if the court issued a decision that said physical presence, if they adopted our view of the correct answer that said you make one sale into the state in your obligated to collect the sales tax, i have no doubt if they issued that ruling many states would adopt regimes that are
less hospitable to retailers unless they were stopped from doing that by congress. my point is that there are various context in the dormant commerce clause particularly whether estate taxes likely to cause duplicative taxation. when the burdens on interstate commerce be exorbitant? i have my doubts that applies here, but even if it did, what the retailers are asking is something much more than that. they are asking for the court to say that because if every other state adopted a regime that was a much more onerous variant of what south dakota statute does, south dakota statute must be invalid. there's no jurisprudence for holding back. >> on duplicative taxation, does the government have a position on the question of whether retroactive application of this
would be constitutional. >> in our view it would be, in part because as we said earlier, we don't understand it to have internet presence. the court can simply clarify quill rather than overrule it. if the court felt that retroactive application of the decision, the collection of back taxes raised more substantial constitutional problems, it could simply leave open the possibility of additional challenges to back taxes even as prospective applications of the law. >> may just ask you before you finish, what is the government's position on the prospect of perspective overruling? then we would have no recollection of the problem. >> i think they have issued perspective constitutional rules in the following sets and that is that they have determined
correctly that the court's role is to interpret the constitution not to amend it. if the court says in june of this year that the commerce clause means ask, i can't say that up until now it meant something else. in that sense, perspective decision-making is inconsistent with the judicial role however there are circumstances and qualified immunity is one of them where even though the newly announced constitutional rule, as a rule applies retroactively, the availability of particular types of relief may depend on whether people were justifiably uncertain at the time. >> thank you counsel. >> mr. isaacson, mr. chief justice, i would like to direct
my initial responses to some of the questions that justice breyer was asking counsel. he pointed out the fact that there are conflicting numbers before the court regarding what is the amount of lost revenue that the states are expressing. he said what should we rely upon. the most authoritative independent and extensive study was the one that was done by the general, billy office. the general accountability office determined that the private study that was done by two professors at the university of tennessee which was issued in 2009 based on 2006 figures and then updated in 2012 based on 2009 figures, the gao indicated that the figures were only one quarter or one third of the amount of lost revenue.
>> that wasn't the problem really. the problem is that your brief is filled with stuff, i mean, for example, go to the website which i went to that they recommend and it seems easy to determine what the sales tax was and you say but my god, even 12 in south dakota and 10000 different ones and you try to do that and you get it wrong and the state assesses $500 penalty for every mistake which is billions, or a lot and the class-action lawyer sues you for having paid too much. your brief is filled with that kind of thing. their brief says. >> even if we don't have perfect software, we can develop it. it's not so hard, and when there's a demand for it we will do it. it will be easy. you say it's going to cost thousands and thousands of dollars for a small business, maybe all their profits eaten up in accounts. they say that won't be necessary, will do it on software. : : :
even in a matter of stare decisis when there's a special justification for overruling quill. the problem is no record was it entered into the court for substantial justification. >> how about going back to this very basic issue and the assertion is asking too collects tax on goods in the state discriminates against interstate commerce but i see it far from discriminating. anyone who wants to sell and state court interstate shop for out of the state shop everyone
is treated to the same tax collection. subject to the end state tax. why isn't that equalizing rather than discriminating? >> well the dormant commerce clause takes this principle objective and makes it a single national marker place that's free and acceptable to all participants and the court found and the decision and 67 that the existence of 2300 different sales and use tax jurisdictions with varying rates, varying conceptions in varying taxability items varying filing and audit obligations was a burden on state commerce. in 1992 when quill was decided that figure went from 2300 to 6000. that figure today is over 12,000 in different jurisdictions of the concern that the courts had
was this notion that a free and open market would the encumbered by that degree of complexity and that complexity --. >> i don't think you have addressed justice ginsburg question which is brick-and-mortar retailers if they choose to operate in any given jurisdiction there a lot of retailers that have to comply with a lot of jurisdictions rules. why should be favor of this court, favor a particular business model that relies not on work and mortar but on mail order? i understand the court was concerned about a nascent, small mail order industry. those concerns seem a little antiquated today so if you could addressed justice ginsburg's question, and the same one i have so peaked sale that would be helpful. >> thank you justice gorsuch's. the states exercise their sovereignty based upon the
territorial minutes. a key part of horizontal -- in this country so there's going to be some standard that determines what is the company subject to the tax jurisdiction of the state using the territorial laws in that state makes sense. what i think is the most significant and looking at this issue is that most of the large retailers, 19 of the 20 largest internet retailers already do collect tax because the nature of the market has required them to establish local revenue. among the top 100 in the reach and the collection rate is between 86 and 97%. >> i accept that is still not responsive council. you are pointing out that more internet retailers are moving towards brick-and-mortar. fine but again why should this court favor those who don't? over those who do? that's the question.
>> the united states has suggested that even one sale into the state would require it. this sale retailer only has to comply with one jurisdiction where their store is located. >> you may know the answer but with all these numbers, i made one part of the answer to that in my mind or not an answer to help resolve it is what does it cost for a mandolin seller who sells mandolins on the internet to sell them in 50 states? how much does it cost him to enter that market? how much did it cost sears rows rows -- sears roebuck and that's an ancient name and by the way how much does it cost amazon voluntarily to comply and i mean there aren't. questions that i think are -- would help me reach an answer and if you know them tell me.
what does it cost amazon? what does it cost the mandolin seller? i don't know. do you know? do you know what it cost amazon? >> i do not know where cost amazon but i know the and i'll report cited in her brief to the court indicated that the cost of implementation and integration of a software system before you deal with any of the other issues cost up to $250,000. see that but it starts at $12. we know that too so that figure seems a little misleading. the real question justice breyer is getting out and i need your help on this too is the comparative difference. after quill now states may force internet providers to provide
information to enable them to collect taxes from the taxpayer. there isn't note duty at all of the internet supplier verses collecting sales taxes. it's something like collecting sales tax. do you have any information at all as to which is the lesser burden? i wondered whether it might be more burdensome to clients like yours who do sales over the internet. >> the colorado regime is much less burdensome. >> do you have any data on that? is there anything at all that tells us that? >> the annual reporting plan has not arrived yet. doesn't arrive until next year so there is no empirical evidence but the reporting requirements simply require a
single annual spreadsheet of all the purchases that were made by colorado residents. >> he has the burden of going after it in the real world. it's much more efficient to get it from the seller than going after the individual consumer. >> and i think that speaks justice ginsburg to the value of a congressional solution. for example what it requires is one rate for state along with the sales we can require a clearinghouse that can be used for the processing. it can require standard uniform definitions of products so that food and sports and clothing doesn't mean one thing in one jurisdiction and another elsewhere. i think an important part of the history of this issue and
correcting what i think is the misimpression presented by the united states and the state of south dakota is that congress has acted on this issue going back to shortly after the quill decision. congress passed the tax freedom act in 1998 which established an advisory commission on electronic commerce which issued a comprehensive report in 2000 detailing the items that the state should address to simplify their tax systems in order to warrant federal legislation. it called upon the states to develop a system. the minority report called upon the states to issue come to develop a system within two years. the states did not develop that system. a number of states initiated a project called streamlined sales tax project to come up with a uniform system of taxation and
over two-thirds of the states with a population of more than two-thirds of the national population refused to join in that included the largest states like new york, pennsylvania, illinois, texas, florida and california. so congress has given clear direction to the states, the kind of steps it should be taken if they are going to be obtaining from congress broader tax jurisdiction. >> can you imagine us saying anything and it's hypothetical, to accept your position. is there anything we can do to give congress a signal that it should act more more affirmatively in this area? >> i would welcome a decision from this course that would move forward with consideration and action upon legislation. >> maybe they already have made a decision or at least the
majority is made a decision. this is something that's going to lead the way that it has been for 25 years. i think it would be strange for us to tell congress how to do something in any particular area >> i certainly wouldn't advise this court on how it should relate to congress but i would point out mr. chief justice that all of the players involved in this issue are in favor of federal legislation. for the direct marketing industry as i pointed out to you the largest players would welcome. >> you say congressional action should be taken against a the background in which this court has made the statement of constitutional law that is now
proven incorrect so you want congress to act against the background of which this court has made an incorrect resolution of the law. that is the assumption you are making. the backup argument is that quill is correct and i understand that. i'm certainly not suggesting that congress should we acting to correct this court's quill decision. rather this court recognizes in its quill decision that congress has the power and was better suited to address it. >> the assumption of many of these questions is quill was incorrect but that doesn't make any difference. i'm suggesting that it does make a difference when congress acts for it to determine what the constitutional rule is as correctly stated by this court. i understand you think that quill is correct but most of these questions just assume that quill was incorrect but what
difference does it make? >> i think that's an issue of stare decisis because stare decisis even where the court has ruled incorrectly there is value in settling expectations and standing by at decisions previously. that is the most powerful when congress has the ability to correct an error if that error existed. both the state in the united states feel very likely with the issue of stare decisis. >> from the very beginning there was the suggestion that there be an attached case. why shouldn't the court take responsibility to take the current commercial arrangements. you said that has been done in some areas.
why do we ask congress to overturn our obsolete president? >> quill court did not invite litigation on the issue. justice canady made that issue and it's a recurring opinion in the bold decision but i think the main reason justice ginsburg is because of the power of stare decisis especially on the issue of reliance. if this court decided to overturn quill and i think justice alito gave two alternatives, either an immediate overturning of quill or turning to a congressional solution, the results would be chaotic. it's interesting if you take the statement of colorado's house of representatives stating quote if the supreme court rules in south dakota's favor could become a
marketplace free-for-all. a south dakota's small business forces would be forced to comply with 1000 different tax structures nationwide without the tools necessary to do so. that's from a high official representing. >> don't you think there's enough in the system that if we did than entrepreneurs would produce software that meets the market need? >> the notion of software being a silver bullet i think it's a real misapprehension. the actual looking up the rate for 12,000 different tax jurisdictions hardly scratches the surface. retailers need to map their products against that software which is rife with errors because common problems such as different states and it's not the 45 states but the district of columbia that have sales tax
but there are over 500 home ruled jurisdictions that have their own tax breaks -- tax base definitions. the retention that's necessary expires, exempts uses, is a difficult process that needs to be done by the retailer. the filing of the report's are different at various dates. >> i think justice ginsburg was suggesting that all these functions would be essentially taken over by companies like amazon and e-bay and they would do it for all the retailers on their system. now there's something a little bit ironic and sang the problem with quill was at and offended all of these companies so now we will have to overturn quill so will benefit the exact same companies but i think that's the idea. the impact would not fall on individual entrepreneurs but
instead they would pay fees to companies like amazon. >> the problem just as kagan is a member of the problems that i described cannot be reformed by software. for example if you need to collect resale in public exemption certificates the states require that those be physical papers that you collect. there's no software for that. if the state coming into audit use software doesn't solve that for you in any respect. software can do certain functions and thus functions might be improved by a entrepreneurial initiatives but they are aren't going to solve every issues and what will happen is the substantial costs associated with this, smaller companies will be deterred from that market. they have a choice. they can either invest in opening a store within the state and for going a national market or they can develop the web site and sell to a national market.
c if they open the store than the state and its hit by these remote sellers of small to as this person inside the state suffers. >> it's interesting justice ginsburg that currently over 70% of all small businesses have a web site. by the end of 20 tenets estimated that 90% of small businesses will have a web site so the issue here is not between small in-state retailers and out-of-state direct marketers. the real competition is between the large companies who aren't multichannel merchants who are increasingly dominating the internet and if you increase the cost and you have entry one of the inevitable effects is going to be though small and
medium-size companies are going to be deterred and there will be greater concentration by the largest retailers. again i think that is antithetical to the objectives of the commerce clause. the argument that the united states made a stink raised some very disturbing notions of what the future would look like. the notion mr. stewart presented there is no constitutional minimum that overturns quill that any single sale would obligate companies to than comply with that jurisdictions tax would really mean that you have most smaller merchants saying it's not a function that we can assume. >> that was really something that congress fixed because it
doesn't look like it's increasing taxes but fixing something like that would not encounter the same hurdle. >> absence of any incentive of the states to seek a congressional resolution in the event that quill was overruled a think is a major impediment to the notion that congress could come in and fix the problem and as as justice sotomayor pointed out what happens in the interregnum? what happens in a one, two or three year period before congress acts and companies are confronted with a dilemma of collection? the notion of a chaotic period preceding congress coming in to address the issue is as daunting as any in terms of what the consequence of overruling quill would he.
c the announcement today congress can sometimes at with rapidity. >> in this instance for example late director of tax policy for the state legislature has publicly stated that if this court were to overturn quill there's no reason that the states would favor a -- favor federal legislation so that dynamic is one which i think would likely stalemate in congress rather than encourage congress to act. i do want to make special emphasis on the issue of stare decisis because since quill has been in place and there has been a clear explanation of what the standard is for tax jurisdiction literally thousands of companies have conformed their conduct to the standard that was
established. justice scalia's current quill case said where that kind of reliance's presence and companies have ordered their economic affairs in that reliance that the adoption of stare decisis acted and in a pointed out that's especially so where congress can address the issue. if congress were to address the issue i think there had be no doubt that it would be purely prospective and that's the only thing they could do was to have a respective laws. but this court as you have indicated a respective ruling is inconsistent with its view of the law. they made that clear in the harper case. c what is the reliance you are talking about other than the retroactivity questioned? >> their investment positions based on the business model
understanding the quill model. >> at the assumption when you are talking about stare decisis is that the decision was wrong and you are saying the business decisions on the basis of the erroneous decision when the decision is based on the facts that will use taxes are not being paid. in other words the benefit comes not just from the fact that they don't have to collect that the fact that most people are paying these taxes. >> i think just as kagan's decisions and campbell made clear that the application of stare decisis is not contingent upon the corrective of the decision which is being followed. in fact it's a decision is correct stare decisis isn't necessary. the decision would be standing on its own legs. so here you have a situation quite different than other cases where the court has been able to
declare that there was no reliance or no rightful reliance that situation where you have the whole industry that is understood what the rules are. i think justice scalia's term in the quill case was these companies have the right to take us at our word and that was the standard that was applicable. >> is their debris that i could read to determine what constitutes a small business in america? i don't even have the answer to that. the figures that were given were based on the small business but his 200 sales a year the minimum or is it something higher? the south dakota law has a minimum amount of sales. i don't know enough about the internet to make any judgment under the solicitor general to make a judgment that these are actually the right numbers.
is there something i can look at? >> the administration to find small business areas categories of business activity. the figure of 200 transactions need to be put into clear perspective. the average internet transaction is $84 so 200 transactions at $84 is less than $17,000 so it's not the $100,000 a year. etsy has 1.9 million participants and many of them are selling products that only have the $10 sale value. the compliance costs of complying with the south dakota sales and use tax laws on $2000 worth of sales becomes a good example.
>> what are colorado's reporting requirements? come peering barriers to entry we have to compare apples-to-apples so we wouldn't necessarily compared against a baseline number. we have to report against the state requirements so do you know what the delta various? >> i don't, your honor. >> if there are no further questions i think the court. >> thank you counsel. five minutes remaining. >> mr. chief justice. justice breyer iou in answer to your third question and that is what would apply and i will tell you the sky is falling. this court's jurisprudence is in place with respect to the collection side in terms of word and the balancing has in place provisos constitutional protections but when it comes to congress. >> i'm sorry you said earlier
one sale could justify the requirement. are you backing off of that? >> i think it issued annexes. i think there could be a set of circumstances and that's addresses that in the balancing but generally speaking if there is a sale there's an activity. >> the benefits state revenue did not outweigh the compliance laws associated with the tax collection obligation. that seems like a sensible test until i think of 10,000 cases being brought by 20,000 employers on one side and another 20,000 on the other two gig -- decide jurisdiction by jurisdiction and case-by-case. that was my problem.
>> complete auto addresses every other tax situation. >> that's a very good point. >> paik addresses every other state regulatory system under the congress clause in its based on that the sky isn't falling to the question came up about what signal needs to go to congress and i would submit i don't believe this court has to but if they are looking for signal that signal is to overrule quill and to reset the default so that the default isn't doing all the work. it's a situation where it's this court's decision in quill that is basically striking down every state statute including mine no matter how the nondiscriminatory, null matter how old the burdens are. i live in a state where there's to mind taxing which means we pay all those costs. that we pay the businesses up to $70 a month to be a part of that so there is no burden. certainly less of a burden than what is happening in colorado with the notice and reporting requirement.
the question came up about no rickard and the reason there is no record in any of these cases is because quill makes every fact beyond physical presence irrelevant. that's why quill was a summary judgment. this case is summary judgment and i think it's truly one of the small sellers. quill doesn't do that because you have a "national geographic" situation where a business has something in a warehouse or a sales representative goes into a state in doesn't just trigger the states taxing, it triggers every local jurisdiction. california it triggers several different consequences so quill doesn't protect against that. statute such as south dakota's does. so it's a reasonable limit of $100,000 and 200 specific transactions. i know there has been a lot of conversation about retroactivity and i would again go back to the
states are not looking to apply this retroactively. 38 states laws set forth in part b cans. 45 states attorney generals and the chief litigants that will be addressing this issue are telling you there are significant constitutional concerns. >> why is it that the states are doing it? the other side pointed to a number of states that rar. >> justice sotomayor i believe the other side pointed to one state, connecticut whose low-level representatives sent a letter asking them from there forward. attorney general jepsen who signed the amicus briefs will be making that decision. the true problem with retroactivity is what is at issue. what is at issue is not an assessment. the collection. ..
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