IndependentsDec 23, 2024
Philadelphia 76ers’ Tyrese Maxey Stars in The 1916 Company’s New CampaignThe retailer’s “On the Clock” campaign celebrates how time, precision, and purpose come together.
EditorsSep 19, 2017
South Dakota, Online Sales Tax and the Supreme Court
Last week, South Dakota’s highest court shot down Senate Bill 106. Here’s why it matters in the ongoing fight over internet tax.
Unless you’re one of the 800,000-plus residents of South Dakota, it’s unlikely you’ve heard much about Senate Bill 106.
Introduced in the state legislature by a bipartisan group of seven senators and eight representatives last year, S.B. 106 mandates that companies that make more than $100,000 in sales or have more than 200 transactions per calendar year in South Dakota remit sales tax, whether they have a physical presence in the state or not.
In introducing the bill, legislators argued that, first, the state needs the revenue it’s missing from online sales and, second, that the current law of the land, so to speak--Quill Corp. v. North Dakota--needs to be re-evaluated.
Quill is the U.S. Supreme Court ruling from 1992 that prevents states from collecting sales tax from sellers with no physical presence in the state; the overarching argument of internet tax proponents everywhere is that this 25-year-old law is now wildly outdated given how consumers shop today.
S.B. 106 passed both houses with little opposition and South Dakota’s Republican governor, Dennis Daugaard, signed it into law in March 2016.
It wasn’t long after the bill’s passage that three online retailers, Overstock.com Inc., WayFair Inc. and NewEgg Inc., pushed back and the case wound its way through South Dakota’s legal system, landing with the state Supreme Court in short order.
Salt Lake City-based Overstock.com sells a variety of merchandise, including fine jewelry, ranking among the $100 Million Supersellers in the 2016 State of the Majors report and, spoiler alert, in the soon-to-be-published 2017 edition as well.
WayFair, meanwhile, is a Boston-based online seller of furniture and home décor, and City of Industry, California-headquartered NewEgg is an electronics retailer.
In a ruling issued last Wednesday authored by Chief Justice David Gilbertson, the court sided with the e-tailers, stating that: “However persuasive the state’s arguments on the merits of revisiting the issue, Quill has not been overruled. Quill remains the controlling precedent on the issue of Commerce Clause limitations on interstate collection of sales and use taxes.”
Despite the court’s siding with the internet sellers, Chris Fetzer of Haake Fetzer, the firm that lobbies for Jewelers of America on behalf of the industry in Washington, said that the authors of the bill do not view the ruling as a failure.
It is, in fact, exactly what they wanted.
“It was fully expected that it (S.B. 106) would be challenged as illegal. This law was written to be challenged within
the court such that that the challenge could serve as a vehicle for the U.S. Supreme Court’s reconsideration of the Quill decision,” Fetzer told me Monday, adding that similar actions are being taken in other states, including Indiana and Alabama.
What has compelled them is a recent statement from U.S. Supreme Court Justice Anthony Kennedy in the DMA vs. Brohl case, which reads in part: “[T]he internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a state in a meaningful way without that presence being physical in the traditional sense of the word.”
He said that it is “unwise [for the U.S. Supreme Court] to delay any longer a reconsideration of the court’s holding in Quill.”
I reached out to Overstock.com, the lone jewelry retailer out of the three, for comment on the ruling and Kennedy’s comments late Monday afternoon.
The company was not able to respond by press time, but board Chairman Jonathan Johnson told Bloomberg that proponents of online sales tax are putting too much emphasis on that statement from Kennedy and have no assurances that the U.S. Supreme Court will take up the case or, if it does, rule in their favor and overturn Quill.
I think the statement from Justice Kennedy is pretty clear, but Johnson is right about one thing: There is no guarantee that the Supreme Court will decide to hear the case, though the chances increase if more states get involved.
Fetzer said typically, what most attracts the Supreme Court to take up a case is a “circuit split,” when multiple federal appeals courts have ruled in conflict on a given issue.
That is not at play in this instance, but what also can be attractive is when there’s an issue that multiple states are concerned about, which could happen here as more states could join South Dakota in petitioning the Supreme Court to review Quill.
Johnson also is right about another thing: There is no guarantee the court will rule to overturn Quill even if it does take up the case.
But, Fetzer points out, Kennedy’s comments indicate that he would be in favor of changing Quill and the court’s newest justice, Neil Gorsuch, also has expressed his support for the arguments that have long been put forth by internet sales tax proponents.
The court’s next term commences in October, so there’s a chance it could revisit the Quill decision between next month and June 2018.
We’ll keep you posted.
What has compelled them is a recent statement from U.S. Supreme Court Justice Anthony Kennedy in the DMA vs. Brohl case, which reads in part: “[T]he internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a state in a meaningful way without that presence being physical in the traditional sense of the word.”
He said that it is “unwise [for the U.S. Supreme Court] to delay any longer a reconsideration of the court’s holding in Quill.”
I reached out to Overstock.com, the lone jewelry retailer out of the three, for comment on the ruling and Kennedy’s comments late Monday afternoon.
The company was not able to respond by press time, but board Chairman Jonathan Johnson told Bloomberg that proponents of online sales tax are putting too much emphasis on that statement from Kennedy and have no assurances that the U.S. Supreme Court will take up the case or, if it does, rule in their favor and overturn Quill.
I think the statement from Justice Kennedy is pretty clear, but Johnson is right about one thing: There is no guarantee that the Supreme Court will decide to hear the case, though the chances increase if more states get involved.
Fetzer said typically, what most attracts the Supreme Court to take up a case is a “circuit split,” when multiple federal appeals courts have ruled in conflict on a given issue.
That is not at play in this instance, but what also can be attractive is when there’s an issue that multiple states are concerned about, which could happen here as more states could join South Dakota in petitioning the Supreme Court to review Quill.
Johnson also is right about another thing: There is no guarantee the court will rule to overturn Quill even if it does take up the case.
But, Fetzer points out, Kennedy’s comments indicate that he would be in favor of changing Quill and the court’s newest justice, Neil Gorsuch, also has expressed his support for the arguments that have long been put forth by internet sales tax proponents.
The court’s next term commences in October, so there’s a chance it could revisit the Quill decision between next month and June 2018.
We’ll keep you posted.
More on Editors
The Latest
GradingDec 23, 2024
GIA Adds Filler Identification to Emerald ReportsLab clients have the option to request this addition on their emerald reports.
Events & AwardsDec 20, 2024
Two Participants Complete Inaugural Ella Klein InternshipJamie Dunton and Gabriella Botelho are the first graduates of the program, created by the WJA Foundation and Julius Klein Diamonds.
Brought to you by
A Diamond Is Forever Celebrates "Forever Present" Holiday CampaignA Diamond is Forever hosted a holiday celebration in honor of their new marketing campaign, ‘Forever Present.’
CollectionsDec 20, 2024
Piece of the Week: Retrouvaí’s Ring for CharityIn the spirit of giving, Retrouvaí will donate $4,000 from the sale of this ring to the Los Angeles Regional Food Bank.
Weekly QuizDec 19, 2024
This Week’s QuizTest your jewelry news knowledge by answering these questions.
IndependentsDec 19, 2024
Michigan’s DeVries Jewelers Unveils New Location in Time for the HolidaysCo-owner Dan DeVries shared what it’s like moving into a space triple the size of its old store and how it feels to be a “real jeweler” now.
CollectionsDec 19, 2024
State Property Transforms Spain’s Generalife Gardens into JewelryAlong with the latest “Gardens” collection, the brand has released limited-edition designs offering more indulgent pieces.
Brought to you by
De Beers Group Launches Holiday Campaign for Natural Diamonds‘Forever Present’ campaign revives the iconic A Diamond is Forever tagline and celebrates the diamond dream.
CrimeDec 19, 2024
Alleged Jewelry Thieves Attempt Rowboat EscapeThe man and woman are accused of stealing jewelry from a shipping container then trying to flee by paddling a small boat out into a bay.
SourcingDec 19, 2024
The Second-Largest Diamond Ever Found Now Has a Name The 2,488-carat diamond recovered from a mine in Botswana has been dubbed “Motswedi” while its 1,094-carat sibling is “Seriti.”
SourcingDec 19, 2024
Gemfields Reports Record Ruby Auction Results Despite Challenges at SourceThe average price per carat hit a record high for the miner, which said it remains unaffected by the conflict in Mozambique.
AuctionsDec 18, 2024
Alexandrite Ring Sells for Record-Setting $1.9M at Sotheby’sThe nearly 17-carat stone made history for the color-change gem that, according to the auction house, is experiencing a “notable surge” in the market.
WatchesDec 18, 2024
Historic Titanic Pocket Watch Winds Its Way Back to Tiffany & Co. More than a century after survivors gifted a Tiffany timepiece to the captain of the ship that rescued them, the jeweler has reclaimed it.
TechnologyDec 18, 2024
Picchiotti Utilizes AI in ‘Spotlight’ Video CampaignThe videos highlight how pieces from the “Xpandable” and “Reversible Xpandable” collections put the wearer in the spotlight.
IndependentsDec 18, 2024
Industry Veteran Steve Feldman Set to RetireFeldman reflected on 45 years in the jewelry industry and clarified that it’s not a total retirement.
Events & AwardsDec 17, 2024
Chanel to Receive Gem Award for High Jewelry ExcellenceThe luxury brand is being honored for excellence in high jewelry design in its “Haute Joaillerie Sport” collection.
SourcingDec 17, 2024
Frank Circelli, Founder of Gem Shopping Network, Dies at 75Circelli was a pioneer in the world of TV shopping who is remembered for his passion for gemstones and his big personality.
AuctionsDec 17, 2024
Blue Diamond Fetches $8.8M at Christie’sThe nearly 6-carat stone headlined the recent jewelry auction, which also featured Mica Ertegun’s jewelry.
CrimeDec 17, 2024
‘Black Bin Crew’ Robbers Get 14-16 Years in Prison The three men, who got their nickname because they’d toss the jewelry they stole into black plastic bins, were arrested back in August.
TrendsDec 16, 2024
Marion Fasel’s New Book Delves Into the History of Engagement Rings“The History of Diamond Engagement Rings: A True Romance” is a 128-page small-format book containing more than 165 images.
WatchesDec 16, 2024
Take a Look Inside the New Rolex Boutique on Rodeo DriveGearys opened a 6,200-square-foot Rolex store with a design that pays homage to the brand’s connection to the ocean.
GradingDec 16, 2024
GCAL By Sarine Expands 8X to 2 More Fancy Shapes The diamond cut grade is now available for marquise- and pear-shaped diamonds.
SourcingDec 16, 2024
Diamonds Do Good Announces 2025 Award RecipientsDDG said the honorees’ business practices embody a commitment to positive social impact, industry innovation, and community empowerment.
TrendsDec 13, 2024
Selena Gomez Said ‘Forever Begins Now’ to Marquise Diamond Engagement RingEstimates on the size and value of the solitaire diamond, which is mounted on a diamond pavé-set yellow gold band, vary.
TrendsDec 13, 2024
Piece of the Week: Martin Katz’s Tanzanite Drops These half-moon tanzanite earrings totaling 25 carats are part of a special trunk show taking place this weekend in Dallas.
Recorded WebinarsDec 13, 2024
Watch: The Highs and Lows of 2024The National Jeweler editors recap the top news, the best jewels, and their favorite stories of the year.
AuctionsDec 12, 2024
Tom Brady’s Watches Top $4M at Sotheby’s AuctionThe highest-grossing lot of the sale was the retired QB’s Rolex Paul Newman Daytona “John Player Special.”
