tv South Dakota v. Wayfair Oral Argument CSPAN April 21, 2018 6:59am-8:01am EDT
>> we are arguing first this morning in case of 14 794, south dakota versus wayfair mister chief justice and may it please the court, there are two significant consequences rsbrought about by quill. our states are losing massive state sales tax revenues we need for education, healthcare and infrastructure. , our small businesses on main street are being harmed because of the unlevel playing field created by quill where out-of-state remote sellers argument 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? it's not the merchants who are paying the sales tax, it's the consumer. they are collecting it for you. so find a way to collect from them.
>> justice sotomayor, we believe we have a right because we have a statutory scheme in place that is nondiscriminatory. there are apportionment issues. it's a fair scheme. it has safe harbors in place . >> your scheme but i'm not concerned about your scheme as such. i'm concerned about you info many on answer questions about overturning president will unseat a massive amount of lawsuit. you told us will has created a ton of lawsuits, i guess every law does but here there significant ones. you're not retroactive but your adversaries point out there are many states who have already made this collection retroactive so we have that question. we have questions about what's the context you have to do to impose this obligation? are we going to decide under complete auto? are we going to decide under
light balancing? how much contact is enough to justify placing this on an out-of-town seller? there's going to be a host of questions. what happens when the tax program breaksdown ? as it already has when the states were using it and merchants can't keep track of who they sold two. all these are questions that are fraught with difficulties so you are introducing now whole new set of difficulties to put behind something that's been in place for 30 years now justice sotomayor, we encourage using the document doctrines already in place when it comes to a tax assessment to look for discrimination, told for apportionment issues, to look for a financial nexus. >> how about economics? >> economics can be addressed by pike.
in fact, it is able to take a look at the actual -- >> how many sails does it take? you're at 200,000 or 200 sales, i don't remember the monetary amount.what's the minimum? >> in south dakota it's set at 200 -- >> that still doesn't answer the question, what the minimum everywhere else? >> the man minimum would be one sale because if you look at auto, that creates the nexus. >> what's the question of cost you're going to put on small businesses. >> small businesses are the ones affected most by quill. that small businesses put at a disadvantage because of quill. if you look at -- >> airport at disadvantage not by quill but by the fact that there are massive discount sellers not just on the internet but even in stores now. i'm talking about the added
cost of doingbusiness for the small businessman . one of the priests said it was a $250,000 cost to implement one of these sales programs, one of these sales tax programs? >> that bree left out that it's the scale and it begins at $12 a month or 30 transactions. when you look at the cost associated with collection -- >> that doesn't include auditing? that doesn'tinclude integrating the program with the existing sales program of the company ? it doesn't count for the maintenance ofthe program . there's lots of costs that are inherent. >> one thing to look at is the fact that all these he sellers, at least in the 45 stage with a sales tax already have a collection and
remittance obligation and already have in place the software that is able to calculate -- >> there's five states that don't centralize. >> with those five states as indicated from the briefing it's to scale and it begins at $12 a month for 30 transactions and i think the important thing to look at when it comes to burden is quill in the physical presence to address that issue. itdoesn't address that issue because as shown in national geographic, you may have a situation where there's warehouse, goods in a warehouse at a particular locality where it will trigger the sales tax obligation . >> as i understand you to acknowledge that there would be a constitutional minimum with respect to the burdens? in other words, that some businesses blyou could not
impose the obligation on, some small businesses? >> mister chief justice, that's what pike is for it to determine in jbalancing if there is a constitutional concern, a commerce clause concern . >> in other areas you just mentioned, i don't know that we've recognized alone with level for things like a physical presence. isn't it one person, one building? so that would be another special rule in this context, wouldn't it? >> that's one way to look at it, that when you look at the burdens and you look at physical presence, there are a lot of things that can trigger it. it can be a building, a warehouse, a traveling salesman that comes to visit mount rushmore and there's a sale. the other important thing when it comes to burden is the state schemes being put in place such as in colorado with the notice and reporting requirements, thoseare burdens that are equal or re perhaps even greater than a simple collection and remittance of attacks . >> if there are two options,
let's say option a is eliminate quill and states can do whatever they want with respect to retroactive liability and with respect to the minimum number of sales that are required in state in order for the sales to be taxed, in order to require them to collect the tax, that's option a. option b is a congressional scheme that deals with all these problems. if those are the only two options, which is preferable? >> option a. congress has had 26 years to address this issue and it's not congress but it's quill. it's this court's decision that is striking down our state statutes. >> usually when somebody says something like that that congress has not addressed an issue for 25+ 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 issue where you say i believe it didn't get on congresses radar screen or maybe congress is too busy doing other things. this is a prominent issue that congress has been aware of for a long time and has chosen not to do something about that and that seems to make your bar higher to surpass, isn't it? >> this is a constitutional interpretation and one way to look at congress is what was just announced by the court today, the microsoft decision. sometimes theactivity of this court willspur congress to act . it did in the microsoft situation but in this instance it hasn't . >> it's just a statutory interpretation, it seems we might expect congress to come in but here i take it your point is right or wrong, this was a vision and if time has changed the distance to
render obsolete, the thought was created after, we will let congress fix up what turns out to be our obsolete precedent. >> it is, justice ginsburg. >> if that's your answer, isn't it normal we treat a commerce clause the same way we treat statutes? the examples are legion. congress cannot overturn a constitutional decision, but in the dormant case if at risk. and of course they can and of course they do so i don't see a differencethere so what's the difference? >> i would say there's a difference . >>but the word constitutional is not magic . the reason that we say we are more willing to overturn a constitutional case is because congress can't act . but here they can act and therefore there is no reason
for treating especially, what is the response to that? >> i think the reason to treat it special is becausewe have a situation where congress has had 26 years . >> we have from three senators and congressmen goodlatte that said congress would act in their reason for stopping was we were going to decide this case. whether they know or whether i know, i guess they have a better view. they are members of congress and the nmany statutes in your 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 in this instance to take action in something that could be perceived as attacks when they don't get the opportunity to use the revenue . >> seems 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 a colorado reporting statute with aggressive moves by the state to try to bring taxation within quill in some way and the states obviously have an incentive to require retail, internet retailers to collect the tax so there are incentives on both sides but if quill is overruled, incentive to the states have to ask for any kind of congressional legislation? >> if quill is overruled the states will have their constitutional responsibilities to follow auto and to follow pike and what's happened here is in quill, this court set the default . it set the baseline so where a state statute as nondiscriminatory as it may be set to south dakota's, it's automatically unconstitutional and struck down. >> cannot ask you the question, two or three brief
questions, you can answer if you wish and when you wish because i read through these briefs and i thought absolutely right and then i read through the other briefs and i thought absolutely right and you cannot both be absolutely right so why is it you have wildly different estimates of cost revenues and what states are losing or not? and other things, can you do i this on the internet? they say there are 12 mistakes even in south dakota. that's question one, how do i find out? you have a list of i would say the 648 really tough practical decisions, retroactivity, all kinds of things. how do we deal withthat? i'd like to know the answer to that and you've already dealt with one which is , well, i'll put it specifically. what's thestandard ? what's the standard the government says physical presence, any?
what? those were my three questions. anytime you wantto deal with them or if you want to deal with them, do so . >> it's been hundred billion dollars over the next 10 years .ar use respondents activity. wait for a collection in 22 states, they do this. quill.com now collects every state so those numbers show that, use the gao that show of course you can do this, companies do this every day. systemax is no longer a defendant because overnight they switched over. south dakota was illustrative of that, we are prospective only and in the briefing the other states have indicated ettheir laws would prevent retroactivity. >> that is something congress could take care of if we overturn quill. >> absolutely.
>> in terms of the economic impact, where suggesting some of the reasons this is a problem that has pete in the sense that the bigger e-commerce companies find themselves with a physical presence in all 50 states so they are already covered in the workarounds that some of the states have employed ggare also bringing more in. if it is a problem diminishing rather than expanding, why doesn't that suggest there are greater significance to the arguments that we should leave quill in place. >> mister chief justice, i think it's because of e-commerce. it is now 90 percent of the market and it's growing. it's been challenging for the state to collect on that e-commerce. >> e-commerce is expanding and something like amazon accounts for a large part of that but they are already collecting in all 50 states. that's the problem, it's not that e-commerce is expanding.
it is, from your point of view i think the problem we have to address is the coverage in terms of collecting the taxes is expanding as well. >> mister chief justice, certainly it's expanding but what remains is that $100 billion loss over the next 10 years. mister chief justice, if i may reserve the remainder of my time . >> mister stewart. >> may it please the court, i'd like to two brief points about the wisdom of leaving this matter to congress. the first matter i'd like to make iswhatever this court decides , owhether it leaves those in place or does something inbetween , congress can act.
congress can impose whatever solution it believes is appropriate and if states are given a greater latitude to experiment, to devise different schemes that would balance the interest of out-of-state retailers against the interest of consumers within the state with brick and mortar retailers, the states own interest in acquiring funds, if state can experiment, congress will have a wider variety of models to look at to decide what aspects of each it would like to choose. the second thing i'd say about stark -- >> it doesn't do anything for the period and the dislocation and lawsuits that it will engender until there is a congressional settlement.. >> the second thing i would say about will's will has come to be understood to stand for the proposition that an out-of-state retailer cannot be made to collect state sales tax unless it has
employees or a physical facility within the state. that's the meaning attached to the phrase physical presence requirement that the court used in quilt. i think in context it's clear that will was not issuing at least an advertisement holding about the role of the internet presence in determining the companies obligation to collect state sales tax. the court was hidealing with phyllis has, it summarized the rule as being sthat if the out-of-state retailers only contact with the taxing state was delivery of goods and catalogs by mail, that was insufficient and the court used the term physical presence requirement. we hibelieve as shorthand for that principle, the court was not saying anything one way or eranother about the role of a pervasive internet presence and developing sufficient contacts with the state to allow for the collection duty and a 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 that you
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 date that a particular statute was jurisdictional he benefit seemed to be the court when it prided itself didn't feel obligated to go through the steps of deciding whether a standard for overruling of prior precedent had been established. it simply said we used the wrong shorthand. where not wrong as to the substance and we will go from there . >> mister stewart, do you believe there is a constitutional minimum so that given a small business using the internet may have greater burdens then amazon and therefore they have a constitutional claim under your position or under your position, can states impose the burden on any micro business, i guess the term that is being used.
>> our view as to the answer that is most consistent with this quote courts commerce clause jurisprudence is there is no constitutional minimum. that if you have an out-of-state retailer is deliberately selling a particular is a go good within the state, shipping the good into the state or delivering to the customer a transfer of title, that is a sufficient basis for subjecting that retailer to the contacts election obligation in the same way that it that single good turned out to be defective, the state could be subject, i'm sorry, the retailer could be subject to regulatory burdens and the state could conceivably be beholden to court to answer for -- >> isn't that the kind of question? that congress would deal with t establishing a minimum? >> rthe fact we don't think there's a constitutional minimum doesn't mean it
wouldn't be a good idea and it wouldn't hinder congress's ability to decide that a minimum should be -- b>> isn't that a reason why we should leave this to congress? from this court's perspective the choice is binary. you act rule or you don't congress is capableof crafting compromises and trying to figure out how to balance a wide range of interests involved . 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 a compromise and congress if it decides it wants to can craft a compromise in ways that we cannot . >> i would agree that congress has a broader range of options available to it then does the court and an ability to devise more nuanced solutions. i don't think with respect that it's accurate to characterize the choice is binary. 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 facilities within the state is not in an ironclad requirement and yet not go as far as we've advocated. within the state is sufficient. and one thing the court couldn't do is as it often does say 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 as well . >> the part i think we can't do after reading these briefs is if their side puts up a certain specter which is that we have four or maybe five giant potential retailers in y the country. i mean, there could be a small number telling
virtually anything and they sell over the internet and in the hope of preventing all the godly etc. is small business which finds it easy to enter. you raise with this entry barriers and they say a lot and you say a little. and 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 minimum in that would in fact preserve the possibility of competition and the possibility of new entry, stopping the entry barriers raising too high. that's something the antitrustpeople can testify about what they're not going vito testify here , so that's the kind of problem that worries me. >> let me say two or three things about that. the gao report said something like 80 or 90 of the hundred biggest internet retailers
obtained their state sales us taxes so it's big companies gbut it's not just the four or five biggest giants so the question is how far down the line do you go? how small does the company have to become in order for the burden of collecting sales taxes to be substantial as a practical matter? a frontline answer is the commerce clause doesn't entitle a flexible business to the ability to make a profit, if the obligation to collect sales taxes and various state pushes it from making a profit to sustaining a loss, that's anot a constitutional defect. the other thing we would say is nobody on the other side is intending at the south dakota law in and of itself places exorbitant burdens and nobody on the other side is even contending that every state did exactly what south dakota has done that the burdens would be exorbitant. >> but the south dakota law is obviously a test case.it was devised to present the most reasonable incarnation
of this scheme but do you have any doubt that state that are tottering on the edge of insolvency in municipalities, which may be even worse position have strong incentive to grab everything they possibly can? >> if the court issued a decision that said physical presence , it adopted our view of the correct answer, that said you make one sale into the state, you are obligated to collect the sales tax. i have no doubt that the court issued that ruling, many states what about regimes that are less hospitable to retailers unless they were stopped from doing that my congress. my point is there are various contexts in the dormant commerce clause, particularly in determining whether estate tax is likely to cause duplicative taxation in which the court says what it every state were to do this?
when the burdens on interstate commerce be exorbitant? i have my doubts that the motive applies here but even if did, what the retailers are asking for is something more than that. they are asking for the court to say because it every other state adopted a regime that was a much more onerous variant of what south dakota's statute does, south dakota's statute must be invalid. there's no prior ruling that. >> even in the issue of duplicative taxation, does the government have a position on the question whether retroactive application of this would be constitutional? >> in our view it would be constitutional in part because as i was saying earlier, we don't understand will to have issued an inadvertent holding with respect to internet presence. the court can clarify quill
rather than overrule it but even if the court felt that retroactive application of this decision, the collection of back taxes raised more substantial constitutional problems, it could simply reopen the possibility of additional pike type challenges to back taxes. >> may i ask before you finish, what is the government's position on the prospect of prospective overruling of quill? then we would have no retroactivity. >> i think the court has is skewed perspective announcement of constitutional rules in the following sense, that is the court has determined, certainly correctly i believe that the court's role is to interpret the constitution, not to amend it. if the court says june of this year that the dormant commerce clause means next, it can't say up until now
because meant something else and in that sense, prospective decision-making is inconsistent with the judicial role. there are certain circumstances and and qualified immunity is one 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. >> mister isaac son? >> mister chief justice and it please the court, i'd like to direct my initial responses to some of the questions thatjustice breyer was asking counsel . he pointed out the fact there te were conflicting numbers before the court regarding what is the amount of lost revenue that the state is experiencing and what should we rely upon? the most authoritative
independent and extensive study was the one done by the general accountability office . and the general nt 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 a 2006 figures then updated in 2012, by 2009 figures, the gao indicated that the figures were only one 12:45 third the amount of lost revenue. >> that wasn't the problem really. your brief is filled with stuff. 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 that my god, even 12 states in south dakota and there are 12,000 odifferent ones and you try to do that and you get it wrong and there's a $500
penalty for every mistake, billions are lost or the class-action lawyers sue 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, we will do it and it will be easy. you say it's going to cost thousands and thousands of dollars for a small business, maybe all their profits enough hiring accountants. they say it won't be necessary, we will do it on software . and do it prospectively, okay? those are logical. how do i decide who's right? >> part of the problem justice breyer is that there is no record in this case so in trying to determine even if a matter sounds decisive,
there's a special justification for overruling quilt. the problem you've identified is no record had been presented that would support that substantial justification . >> how about going back to this very basic issue. the assertion is that asking an out of state seller to collect the tax on goods in state discriminates against interstate commerce but atwhy isn't it far from discriminating, equalizing dollars? that is, anyone who wants to sell in state and out-of-state is out, everybody is treated to the same tax collection obligation . all who exploit and interstate market are subject to the interstate tax. why isn't that equalizing rather than discriminating? >> the dormant commerceclause , faces its principal
objective, the maintenance of a single national marketplace that is free and accessible to all participants and the court found back in the decision in 67 that the existence of 2300 different sales and use tax jurisdictions with varying rates, varying exemptions, varying taxability items, varying filing requirements and auditing obligations was a burden on interstate commerce. in 1992 when quill was odecided that figure went to 6000. that figure today is over 12,000 different jurisdictions though the concern that the quill court had was the notion that a free and open market would be encumbered by the degree of complexity and that complexity is only worsened over time. >> i don't think you've quite addressed justice green
ginsberg's question which is brick and mortar retailers if they choose to operate in any jurisdiction . there are retailers that have to comply with rules. why should we hofavor the particular business model that relies not on brick-and-mortar but mail order # i understand the rs court was concerned about ace may small mail order industry , this concern seems a little antiquated today so maybe you could address justice ginsburg's question, it's the same one i have anything you have would be helpful. >> states exercise their sovereignty based on borders, territorial limits. the key part of horizontal federalism in this country so - if there's going to be some standard that determineswhen is a company subject to the tax jurisdiction of the state , using the territorial limits of that state makes sense. what i think is most
significant in looking at this issue is that most of the large retailers, 19 of the 20 largest internet retailers already do collect tax atbecause the nature of the market has required them to establish a local presence. among the 100 top internet retailers, the collection rate is between 86 and 97 percent. >> i accept that but it's still not a response to counsel. you are merely brpointing out that more internet retailers are moving toward brick-and-mortar, fine. why should this court for 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 scollection. i'll point to sale retailer only has to comply one jurisdiction where their store is located. >> you may know the answer. but with all these numbers, one part of the answer that
in my mind or not an answer but help resolve it is what does it cost for a mandolin cellar 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 roebuck, that's an ancient name . and by the way, how much does it cost amazon voluntarily to comply? and i mean, there are that i al questions think are -- would help me reach an answer and if you know them, tell me . no one asks amazon, what does it cost amazon? what does it cost a mandolin cellar? i don't know so do you know? do you know what it cost amazon? >> i don't know what it cost amazon but in the cavanaugh brief amcited in our briefs to
the court, they indicated that the cost of just implementation and integration of a software system, you're dealing with any of the other issues possible to $250,000. >> that the maintenance of the system. >> it starts at $12, we know that too so that figure tiseems a little misleading. i guess the real question i think justice breyer is getting at and i love your help on this to is the comparative difference. after quilt, now states may force internet providers to provide information like colorado does to enable them to collect tax from the taxpayer. though it's the real delta is here isn't no duty at all on the internet flyer. versus collecting sales taxes, it's something like
colorado's regime versus collecting sales tax. do you have any information at all as to which is a lesser burden? i've wondered whether the regime might be more burdensome to clients like yours who do sales over the internet then just simply collecting the sales tax itself . >> the colorado regime is much less burdensome. >> is there anything at all that tells us that? >> that law has onlygone into effect , the annual reporting requirements hasn't arrived yet, it hasn't arrived until next year so it's no empirical evidence in that regard. but the reporting requirements colorado law, simply requires a single annual rent sheet reporting. of all the purchase when made by colorado thresidents. >> the state has the burden of going after consumers in the real world which is much more efficient, much more likely if you go after the
seller that if you go after the individual computer. >> and i think that speaks to ginsberg to the value of a clcongressional solution. so for example, what congress can require is one rate per state for all remote sales. it can require a clearinghouse that can be used for the processing of payments. it could require standard uniform definitions of products tso that food and sportswear and clothing doesn't mean one thing and one jurisdiction and another elsewhere. i think an important part of the history of this issue and correcting what i think is the misimpression that is presented by the united states and the state of south dakota is that congress has been active on this issue, going back to shortly after the quill decision . progress past the internet
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 their own legislation. >> and it called upon the states system within five years. the minority report called upon the state to issue, to develop that system within two years. the state did not develop that tax system. a number of states initiated a project called streamlined sales tax project. come up with such a uniform system of taxation. and over two thirds of the states or the populations, the population of more than two thirds of the national population refused to joinand that included all the nolargest , illinois, florida, california. oh that congress has given clear direction to the state. the kind of steps that should be taken if they were going
to be regaining from congress broader tax jurisdiction. >> can you imagine saying anything, assuming we were hypothetical to accept your position, is there anything we can do to give congress a signal that it should act more permanently in this area? >> i welcome the decision from this court that would indicate congress should move forward with consideration and action upon legislation. >> i'm sorry, maybe they already have. they've made a decision or at least majorities have made a decision that this is something they're going to leave the way it has been for five years. i think it would be very strange for us totell angress it ought to do something in any particular area . >> i certainly wouldn't
advisethis court on how it should relate to congress . but i would point out mister chief justice that all of these players that are involved in this issue are in favor of a federal legislation. for the direct marketing industry as i point out to you, the largest players are collecting tax . >> but you say the congressional action shouldn't be taken against a background in which this court has made a statement of constitutional law that is now, a special in light of owthe cyber age proven incorrect so you want congress to act against the background in which this court has made an incorrect solution to the law. that's the assumption you made. of course, i know your backup argument is that quill is
correct, i understand that. >> i'm not suggesting congress should be acting to correct this court's quill decision. rather, this court recognized in its quill decision that er congress had the power and was better suited to be addressing -- >> but the assumption of many of these questions is that quilt is incorrect but that doesn't make any difference and i'm suggesting it does make a difference when congress ask for it to determine what the constitutional rule is as correctly stated by this court . i understand you think the rule is correct. most of these questions just assume that quill is incorrect but what difference does it make? >> that introduces the issue of sorry the sizes. even when the court has ruled incorrectly, there's a value in settled expectations and ending by the decision previously and that is most powerful when congress has the ability to correct an error, if that ever existed.
and both the state and united states feel very lightly with the issue of salary decisive. >> if the court is responsible for bellas hess and it was all dissenting opinions and there was a suggestion that they be a test case, why should the court take responsibility to keep up occasional and the current commercial arrangement that has been done in the trust area. ask congress to overturn our obsolete ruling. >> first, the quill court did not invite justification on theissue. justice kennedy raised the issue with his concurring opinion . but i think the main reason
justice ginsburg is because of the power of sorry this icy on the issue. if this court decided to overturn quill and i think justice alito given the two alternatives, either an obedient overturning of quill are turning to a congressional solution, the result would be chaotic. it's interesting, if you take the statement of colorado's only member of the house of representatives said quote, if the supreme court rules in south dakota's favor, it could be a free-for-all. a small business could be forced to comply with 1000 different tax structures nationwide without tools necessary to do so. that's from a high official representing. >> you think there's enough incentive in the system if we did overrule quilt?
and entrepreneurs would produce software that would make a market leave? >> the notion of software as a silver bullet is a misapprehension. the actual looking up of the rate for the 12,000 different taxjurisdictions hardly scratches the surface . retailers need to map their products against that software, which is rife with errors because common products are defined differently in different states and is not nearly the 45 states plus the district of columbia that have sales tax but there are over 500 overrule jurisdictions that have their own tax basesand definitions . the record retention exempts buyers, exempts transactions, exempts uses, is a physical
process that needs to be done by the retailer. the findings are differentfor the various states . >> vi think justice ginsburg said all these functions would essentially be taken over by companies like amazon and ebay and see, that they would doit for all the retailers . there's something a little bit ironic in saying the problem with will is it benefited all these companies so now we're going to overturn will we can benefit those exact same companies. but i think that's the idea, that in fact it would not fall on individual entrepreneurs, instead, they would pay fees to companies like amazon. >> the problem justification is that a number of the functions i described simply cannot be performed by software. so for example, if you need to collect resaleand other forms of exemption , states require that those be
physical papers that you collect. there's no software solutions to that. if a state is coming into on you, software doesn't solve e that in any respect. so software can do certain functions and those functions might haimprove by entrepreneurial initiative. but they're not going to solve these other issues and what will happen because of the substantial expense of associating with this is that small and midsize companies will be deterred entering that market. they had a choice, they can eitherinvest in opening a store within the state , and forgoing a national market. or they can develop a website ev and sell to a national market. the commerce clause lacks if they open a door within the state, >> the remote sellers, it's the small business inside states you are suffering. >> it's interesting justice ginsburg that currently, over
70 percent of all small businesses have a website and by the end of 2018 estimated that 91 percent of small businesses will have a h website . the issue here is not between small and estate retailers. and out-of-state direct marketers, real competition is between the large companies who are on these versions who are multi channel merchants who are increasingly dominating the internet and one of the effects if you increase the cost of admission, if you have barriers to entry, one of these effects is going to be that those small and medium-sized companies are going to be e deterred and there will be even rate or concentration by the largest retailers. again, i think that is antithetical to what the objectives of the commerce clause were. >> the arguments that the united states made i think
raised some very disturbing notions of what the future would look like. the notion that mister stewart presented that there is no constitutional minimum to support the court overturns quilt, that any single sale would obligate the company to then complied with particulars of that jurisdiction tax. would really mean that you have most small merchants say that's not a assumption that we can assume. >> that was something that appealed to congress to fix because the whole picture, it starts to look's increasing taxes but fixing something like that would then encounter the same occurred. >> the absence of any incentives of the state to seek a congressional resolution in the event that
will was overruled i think is a major impediment to the notion that congress would come in and fix the problem . and as justice pointed out, what happens in the interim, what happens in the one or two or three year period before congress acts and companies are confronted with this dilemma. of collection.>> the notion of a chaotic. receding congress coming in to address the issue is as daunting as any in terms of what the consequence of overruling quill would be. >> i do want to -- >> from the announcement today, congress can sometimes ask with rapidity. >> in this instance, needing state leaders, for example the director of tax policy for the conference of state legislatures has publicly stated that if this court
were to overturn quill, there's no reason the states with the favor federal legislation. >> so that dynamic is one which i think would stalemate congress, rather than encourage congress to act. >>. >> i do want to make special emphasis on the issue of certiorari so since will have been in place, there's been a clear explanation of what the standard is for tax jurisdictions . literally thousands of companies have informed their conduct to the standard that was established. justice scalia's conference in the quill case said that where that kind of reliance is present and companies have for their economic affairs, in that reliance, that the doctrine of sorry this icy is
an act me and he pointed out that is especially so where congress can address the issue. if congress were to address the issue, i think there be no doubt it would be epurely prospective area at the only thing congress would probably do is have a prospective law. >> but this court indicated that they purely prospective ruling is inconsistent with its view of the law. and stated very clearly in the hopper case. >>. >> what is the reliance you're talking about under the retroactivity question? >> they've made their investmentdecisions based on understanding what the quill standard requires . so. >> the assumption when you're talking about stare decisis is the decision was wrong. you're saying they make business decisions on the basis of erroneous decision and the decision is based on the fact that well, that
taxes are not being paid. >>in other words, benefit comes from them, not just from thefact they don't have to collect but from the fact most people are paying these taxes . >> i think justice kagan's decisions in mills , and in kimball, make clear that the application of sorry this icy is not dependent on the correctness of the decision which is being followed. in fact, if a decision is correct, that isn't even necessary. the decision would bestanding on its own legs . >> so here you have a h situation quite different than other cases where the court has been able to declare that there was no reliance or no rifle reliance. here you have a situation where you have a whole industry that has understood what the rules are. i think justice scalia's term was these companies have a
right to take us at our word. that was the standard applicable. >> is there any source to determine what constitutes a small business in america? >> i don't even have the answer to that. the figures we were given n was based on a small business. but it's 200 sales a year a minimum or is it something higher? that's the south dakota lawas a minimum amount of sales, i don't know . i don't know enough about the internet to make a judgment as suggested by the solicitor general, to make a judgment that these are actually the right numbers. >> is there something i could look at? >> this administration defines small business in various capillaries of its activity. that's certainly a source that you could look at. the figure of 200 transactions needs to be put into clear perspective. the average internet transaction is four dollars. so 200 transactions by $84.
that's $17,000 is not the $100,000 a year either. and there are manyinternet sellers , for example, see as 1.9 million participants and many of them are selling products that have only a $10 sales value so 10c00 is $2000 compliance cost of complying with the south dakota sales and use tax law are $2000 worth of sales requires whatever the profit was and becomes a good example for colorado's reportingrequirements . ad>> to compare your barriers to entry we have to compare apples to apples so you wouldn't necessarily compare it against the baseline, you have to compare against the
reporting requirements of the statelike colorado so you know what the difference is? >> i don't, your honor. >> i'llhave to check . >> . >> no further questions. >> thank you counsel. and you have exactly 5 minutes remaining. >> mister chief justice, iou an answer to your third question and that is what rule would apply and i would tell you the sky isn't falling. this court's jurisprudence already in place with respect to a tax assessment is complete auto. with respect to the collection side and concerned with burden, a balancing type has in place provides those constitutional protections. when it comes to congress -- >> you said earlier one bill is enough to impose the reporting requirements, are you backing off? if you're saying one sale is enough. >> i think it gives you the nexus. there could be a set of circumstances and that's what pipe is for to address that in the balancing but generally speaking if there's
a sale, there's an activity -- >> but complete auto is a nexus such that the benefit of the states do not outweigh the compliance cost associated with the tax collection obligations that the stateimposed . that seems like a sensible test until i suddenly think of 10,000 cases being brought my 20,000 lawyers on one side and another 20,000 on the other. to decide jurisdiction by jurisdiction case-by-case isn't fast. that was my problem with the auto. >> complete auto addresses every other tax situation other than sales tax and height addresses every other state regulatory decision. and i think based upon that, the sky isn't falling. >> the question came up about what signal needs to go to congress and i would submit i don't believe this has to but
if they're looking for a signal, that signal is overruled will, to reset the default so the fall like here isn't doing all work. it's a situation where it fits court's decision in quill urthat's basically striking down every state statute including mine, no matter how nondiscriminatory, no matter how well the burdens are. i live in a streamlined tax date which means we pay all those costs and in fact we pay the businesses up to $70 a month to be a part of that though there is no burden certainly less of a burden than what is happening in colorado with the notice and a reporting requirement . the question came up about no record and the reason there is no record in any of these cases dis because quill makes every beyond physical presence irrelevant. that's why quill was summary judgment, dna was summary judgment, this case is summary judgment and if you
want to protect the small sellers, well doesn't do that because you have a national geographic situation where a business is placed something in a warehouse or a sales representative goes into a state and it doesn't just trigger the states taxing, it triggers every local jurisdiction also. california it triggers several different tax situations. south dakota does. it sets a reasonable limit of $100,000 and 200 specific transactions. there's been a lot of conversation about retroactivity and i would again go back to the states are not looking to apply this retroactively. 38 in part b of our appendix can. 45 state attorney general's, the chief litigants addressing this issue are telling you there are significant constitutional concerns. >> what is it that the states are doing it? gthe other side to do state
that are already making it retroactive. >> justice sotomayor, the other side pointed to one state, connecticut, whose low-level representative sent a letter to asking it to apply the year forward and i would point out that attorney general jefferson who signed the amicus briefs will be making that decision and the true problem with retroactivity is at what's at issue. what the issue is not an assessment, it's a collection to what should we should be doing is telling the remote seller you don't have to collect and remit this and three years later you would say by the way, you do. we've changed that collection responsibility to a penalty and interest and that has significant constitutional concerns which is why the states are doing it and are likely going to do it. >> i truly believe if you go to look at what is an issue, it goes back to what i said. small businesses are not being treated fairly.
we're not asking remote sellers to do anything we are not already asking our small businesses to do in our state and that is simply to collect and remit attacks. i have no further information, your honor. >> thank you general, the case is submitted. >> you're watching tv on c-span2. >> .. the next 2 days you will hear from and talk with jorge rameau's, david court, black live matters's cofounder, tim o'reilly, clinical commentator roger owes simon a