Attorney General Hector Balderas
SANTA FE ― Monday, Attorney General Hector Balderas announced that he filed an amicus brief urging the U.S. Supreme Court to grant review and reconsider the Court’s outdated “physical presence” rule, which restricts states’ ability to collect certain taxes from out-of-state retailers.
With the decline of brick and mortar shopping and the rise of online shopping, out-of-state retailers – including online retailers – have used the physical presence rule set forth in Bellas Hess, and later reaffirmed in the U.S. Supreme Court’s 1992 ruling inQuill Corp. v. North Dakota, to avoid collecting sales and use taxes.
“New Mexico is in a budget crisis and it’s critical that giant, out-of-state corporations pay their fair share of taxes to New Mexico municipalities and state government as they reap millions of dollars in profits from selling goods in our state,” Balderas said. “The foundation of our economy is made up of small businesses and for too long the federal government has put them at a serious disadvantage. It’s time for the Supreme Court to close the tax loophole that is harming New Mexico businesses and allowing some of the biggest corporations in the world to avoid paying their fair share.”
In 1967, the U.S. Supreme Court ruled in National Bellas Hess v. Department of Revenue that states were prohibited from requiring out-of-state retailers to collect sales and use taxes on goods purchased through the mail. However, South Dakota recently enacted a statute requiring online retailers to collect South Dakota sales taxes.
On Sept. 14, 2017, the South Dakota Supreme Court held South Dakota’s statute unconstitutional because only the U.S. Supreme Court can reconsider its own precedents. South Dakota filed a petition for writ of certiorari asking the U.S. Supreme Court to revisit the matter. Attorney General Balderas is supporting South Dakota’s effort.
Attorney General Balderas was joined in the brief by the attorneys general of Alabama, Arkansas, California, Colorado, Connecticut, Florida, Hawai’i, Illinois, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Utah, Washington, Wisconsin, Wyoming, and the District of Columbia.