Law360 Quotes Bill Nelson on High-Profile State Tax Case with National Ramifications

Law360 quoted Smith Anderson tax attorney Bill Nelson in the article “Uncertainty Clouds Wayfair's Impact On Other State Tax Cases,” which takes a deep dive into a Supreme Court case that has changed the tax landscape in states across the country.

The case, South Dakota v.Wayfair, has been cited frequently in high-profile state tax cases in the five years since the U.S. Supreme Court's decision, but whether that landmark opinion will prove to have broad applicability in state tax litigation is uncertain, Law360 reports. States and businesses have raised Wayfair in cases following the ruling that upheld South Dakota's sales tax law requiring businesses to collect and remit the tax, whether or not they had a physical presence in the state.

North Carolina offers examples of cases in which stretching the parameters of Wayfair has been successful to date in at least one instance, Law360 writes. Wisconsin-based Quad Graphics has petitioned the U.S. Supreme Court for a writ of certiorari in a case in which the North Carolina Supreme Court agreed with the state's tax agency that Wayfair supported the state's authority to impose sales tax on Quad.

That was true even though the U.S. Supreme Court did not overrule J.E. McLeod v. Dilworth, the precedent that indicates otherwise; the North Carolina justices said Wayfair applied because it is the more recent precedent. They also rejected Quad's argument that Wayfair addressed only personal jurisdiction nexus, while Quad is distinguishable because it speaks to transactional nexus, or nexus between the transaction and the taxing state.

Bill has authored an amicus brief in support of Quad on behalf of the North Carolina Chamber Legal Institute. Wayfair is not the applicable precedent, Bill told Law360, because Quad involves an extraterritorial sale, whereas the parties in Wayfair had stipulated that the sales at issue in that case were all made in South Dakota. The case governing extraterritorial sales is Dilworth, he said.

"This case presents an important issue Wayfair left unresolved," Bill said. "The issue of extraterritorial sales was neither briefed nor decided in Wayfair. Dilworth therefore remains good law."

Bill focuses his practices on issues such as transactional tax planning, tax controversies and litigation, dealing with state and federal tax authorities as administrative agencies and representing taxpayers before the North Carolina General Assembly. He has written and spoken on a variety of federal and state tax topics and has been active in a number of state tax and business law legislative reform efforts.

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