The Senate passed The Marketplace Fairness Act (the “Act”) and sent the bill for consideration to the House.
The Senate passed The Marketplace Fairness Act (the “Act”) and sent the bill for consideration to the House. The Act provides that internet retailers must collect sales tax on out-of-state transactions reversing the holdings of cases and interpretations of statutes that protected out-of-state sellers for decades.
There is a long history of case law that prevented out-of-state businesses from being subject to taxation or collecting taxes unless the business had “sufficient contacts” with the state to justify this jurisdiction. Prior to the internet, jurisdictional issues arose out of travelling salesmen, title passage rules and drop shipments. More sophisticated questions arose out of intercompany fees for licensing intangibles, leased employees and order fulfillment centers. States, however, could not exert jurisdiction over a non-resident seller who took orders over the internet. Instead, states relied on their citizens to pay use tax on out-of-state purchases.
In order for a state to obtain the privileges of the Act, the state must either adopt the Streamlined Sales and Use Tax Agreement or adhere to a more simplified sales tax measure. The key measure in either case is that the location of the buyer determines the sales tax rate and state to which it is paid. This will create a more level playing field between brick and mortar retailers and internet retailers. It will certainly help states to collect revenue.
If this precedent is overcome, it will not be long before a VAT could be imposed. European countries impose a VAT on sales of goods and services. The proponents of a VAT cite the sophistication of software to do the reporting and tax calculation. I predict that we will do the same to capture more transactions in the tax net.
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
