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Volume 65, Issue 5: Symposium Issue


Revisiting Miller Brothers, Bellas Hess, And Quill

By Richard D. Pomp | 65 Am. U. L. Rev. 1115 (2016)

The American University Law Review was prophetic in choosing “Taxing Remote Sales in the Digital Age” as its symposium issue. The obstacle to any meaningful sales tax reform of the digital economy is the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North Dakota. In Quill, the Court held that the Commerce Clause requires a vendor to have a physical presence in a state before it can be required to collect that state’s use tax. That requirement has subsequently been roundly criticized. Most notably, in March 2015, Justice Anthony Kennedy wrote a concurring opinion in Direct Marketing Association v. Brohl that sent shock waves through the profession, urging the Court to revisit Quill’s legal underpinnings.

Part of Justice Kennedy’s concurrence is reprinted below because it serves as a wonderful, short overview of the issues dealt with at the Law Review’s Symposium and in some of the articles in this Issue. This Article supports Justice Kennedy by arguing that the Quill decision was intellectually dishonest, politically motivated, and based on shaky precedent. If the Supreme Court has the opportunity, it should abandon Quill.

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Beyond Quill And Congress: The Necessity Of Sales Tax Enforcement And The Invention Of A New Approach

By Lila Disque & Helen Hecht | 65 Am. U. L. Rev. 1163 (2016)

The U.S. consumption tax—the sales and use tax—has been plagued by a seemingly intractable problem: it is built on an enforcement system that depends on seller-collection. But under U.S. Supreme Court precedent, states cannot require “remote” sellers (those without some kind of physical presence in the state) to collect and remit the tax. Consequently, states instead attempt to collect the tax from resident purchasers through self-reporting—a method that has proven to be much less effective. Congress has the power to grant states enforcement authority over remote sellers, but has long denied that assistance to the states. But what if the states had an alternative approach to enforcing the tax on remote purchases? And what if this approach could be implemented without the need for action by Congress or the Supreme Court? The “seeds” of that approach have already been planted.

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Taxing Remote Sales In The Digital Age: A Global Perspective

By Walter Hellerstein | 65 Am. U. L. Rev. 1195 (2016)

The challenges associated with the taxation of remote sales in the digital age are global. Providing a global perspective on these challenges is therefore appropriate, even for a symposium addressed primarily to such challenges under the U.S. subnational retail sales tax. Although the challenges associated with the taxation of remote sales in the digital age are global, the regimes that tax such sales are not. Accordingly, insofar as one looks to the implications of the global perspective on taxing remote sales in the digital age for guidance on U.S. subnational taxation of such sales, one should never lose sight of the contextual differences between the global and subnational tax regimes to avoid “lost in translation” problems.

This Article addresses three fundamental questions raised by the taxation of remote sales in the digital age from a global perspective, but focuses on the implications, if any, of the answers to these questions in the global context for the U.S. subnational retail sales tax. First, should remote sales be taxed under a consumption tax? Second, if the answer to the first question is “yes,” where should such sales be taxed? Third, how can remote sales be taxed effectively under a consumption tax in the digital age?

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Sales Suppression: The International Dimension

By Richard T. Ainsworth | 65 Am. U. L. Rev. 1241 (2016)

Sales transaction taxes are highly susceptible to technology fraud, which is an inevitable result of today’s widespread reliance on technology to document taxed transactions. Technology can be (and is) manipulated to defeat the collection of these taxes. Both the U.S. retail sales tax (RST) and the European value added tax (VAT) are vulnerable to technology-based fraud. This Article concerns sales suppression—intentionally not recording sales—in the RST, and at the final stage of the VAT, the retail stage, when tax is collected from final consumers.

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