Monday, December 19, 2011
Scott Gaylord (Elon) & Andrew J. Haile (Elon), Constitutional Threats in the E-Commerce Jungle: First Amendment and Dormant Commerce Clause Limits on Amazon Laws and Use Tax Reporting Statutes, 89 N.C. L. Rev. 2011 (2011):
This article ... explores the constitutional issues surrounding North Carolina’s efforts to increase sales and use tax compliance. In particular, we analyze (i) the First Amendment issues raised by the federal district court’s order in the Amazon case as well as (ii) the First Amendment and Commerce Clause issues that would arise if North Carolina were to enact a reporting statute requiring internet retailers to disclose to the Department of Revenue the amount of purchases that individual consumers make annually. While the Department of Revenue could use this information to better enforce the state’s use tax law, we contend that such a statute faces difficult First Amendment and dormant Commerce Clause hurdles that, although possibly avoidable, would severely limit the effectiveness of any such statute. Consequently, while we do not reject the enactment of such a tax reporting statute, we contend that the state also needs to continue pursuing alternative approaches to increase use tax compliance. Ultimately, however, the issue of use tax non-compliance may be solved only through federal legislation authorizing states to require retailers to collect sales and use tax despite their lack of an in-state physical presence.