Oral Argument in Wayfair Raises the Possibility That a Sharply Divided Court Will Preserve Quill

Post by
April 18, 2018

As noted in our initial report on the Wayfair case, supporters of overruling the physical-presence rule of Quill appeared to begin the vote-counting with a solid head start, given statements already made by several of the Justices. Both Justices Kennedy and Gorsuch were on record as questioning the continuing vitality of Quill, and Justice Thomas has repeatedly expressed his general disdain for the Dormant Commerce Clause and seems most unlikely to provide a decisive vote in favor of a controversial application of that doctrine.

The oral argument yesterday in Wayfair provided no reason to change the expectation that these … Read More

Briefing Complete in Wayfair

Post by
April 13, 2018

The parties have now completed the briefing in the Wayfair case involving sales tax collection by out-of-state sellers, which was discussed in previous posts here and here.  Oral argument is scheduled for April 17, and the Court is expected to issue its decision by the end of June.

The retailers’ response brief argues that the reliance interests and concerns about undue burdens on interstate commerce that motivated the Court’s decision to apply stare decisis principles and adhere to settled law in Quill remain in force today.  The brief focuses heavily on trying to rebut South Dakota’s contention that modern … Read More

Fifth Circuit Poised to Consider Validity of Temporary Regulations Aimed at Curbing Inversions

Post by
March 7, 2018

We present here a guest post by our colleague Katherine Zhang.

In Chamber of Commerce v. Internal Revenue Service, the Fifth Circuit will consider whether “tax exceptionalism” exists in the context of temporary regulations. At issue in the case are Treasury regulations that provide special rules for calculating the “ownership fraction” for entities engaged in inversion transactions. The district court set aside the regulations as promulgated in violation of the Administrative Procedure Act (APA), and the government has appealed.

Since the Supreme Court consigned the broad notion of “tax exceptionalism” to the scrap heap in Mayo Foundation, 562 … Read More

Briefing Underway and Oral Argument Scheduled in Wayfair

Post by
February 28, 2018

South Dakota has now filed its opening brief in the Wayfair case urging the Supreme Court to abandon the physical-presence requirement for the imposition of sales tax.  See our earlier report here.   Among the points stressed by the State are that the existing Quill rule is generally out-of-step with Commerce Clause jurisprudence; that Quill and its predecessor were decided in the context of mail-order businesses, prior to the explosion of online commerce, and therefore the Court does not have to conclude that those cases were wrongly decided at the time; and that current technology has eliminated the practical difficulties of … Read More

Cert Granted in Wayfair

Post by
January 12, 2018

The Supreme Court announced this afternoon that it will hear the South Dakota v. Wayfair case and consider the continuing viability of the physical-presence requirement for imposing an obligation on out-of-state businesses to collect and remit sales and use taxes.  See our prior report here.

The state’s opening brief is due on February 26.   The taxpayers’ response brief will be due at the end of March.   Oral argument will be scheduled for late April with a decision expected by the end of June.

 … Read More

Supreme Court Poised to Reevaluate the Constitutional Framework Governing Collection and Remittance of State Sales and Use Taxes by Out-of-State Sellers

Post by
January 10, 2018

The Supreme Court may soon consider in a case entitled South Dakota v. Wayfair, Inc., No. 17-494, whether to discard the longstanding rule that states can require companies to collect sales and use tax only if they have a physical presence in the state. The rule dates back 50 years to National Bellas Hess v. Illinois Dep’t of Revenue, 386 U.S. 753 (1967), where the Court held that constitutional limitations on states’ jurisdiction found in both the Due Process and Commerce Clauses prevented states from imposing such a collection requirement on companies that lacked a physical presence in … Read More

Ninth Circuit Remands For In Camera Review in Sanmina

Post by
December 22, 2017

The Ninth Circuit has remanded the Sanmina case back to the U.S. District Court for the Northern District of California to conduct an in camera review of two in-house tax attorney memoranda to determine if the contents of those memos were disclosed in a DLA Piper valuation report provided to the IRS to support Sanmina’s $503 million worthless stock deduction. The IRS had previously asked the district court to conduct an in camera review, and the district court had declined to do so.

As noted in our previous coverage, the DLA Piper valuation report cited the in-house memos in … Read More

Ninth Circuit Panel Ready to Hear Oral Argument in Altera on October 11

Post by
October 9, 2017

As discussed in our prior post, the briefing on the government’s appeal of the Altera decision was completed last January.  The Ninth Circuit is scheduled to hear oral argument in the case in San Francisco this Wednesday afternoon, October 11.

The three-judge panel for the arguments consists of Chief Judge Sidney Thomas, Judge Stephen Reinhardt, and Judge Kathleen O’Malley (of the Federal Circuit, sitting by designation). Judge Thomas was appointed in 1996 by President Clinton, Judge Reinhardt was appointed in 1980 by President Carter, and Judge O’Malley was appointed by President Obama in 2010.  The government is probably particularly … Read More

Ninth Circuit Briefing Completed in Altera

Post by
January 25, 2017

The parties have now completed briefing in the Ninth Circuit in the Altera case, in which the Tax Court struck down Treasury regulations that require taxpayers to include employee stock options in the pool of costs shared under a cost-sharing agreement.  As described in our previous reports, the Tax Court’s decision implicated both the specific issue of whether the cost-sharing regulations are a lawful implementation of Code section 482 and the more general administrative law issue of the constraints placed on Treasury by the Administrative Procedure Act (APA) in issuing rules that involve empirical conclusions.

The government’s opening brief … Read More

Supreme Court Denies Certiorari in Clarke

Post by
January 10, 2017

As we have previously reported, after the Clarke case was remanded by the Supreme Court, the Eleventh Circuit ruled for the government and upheld the district court’s order enforcing the summonses.  Yesterday the Supreme Court denied a petition for certiorari filed by the parties who were contesting the summonses.  The gist of the petition asked the Court to consider whether the district court had abused its discretion in handling the dispute after the remand–a request that is more case-specific than the kinds of issues that would normally be reviewed by the Supreme Court.  This order marks the end of the … Read More

Next Page »