Wayfair, You've Got to Charge Tax on Me

Oh, these are my girls, hello girls

Hello, Max, nice outfit

There are many different ways we pay what we owe

Ladies if you'll form a lovely tableau

Income, property, sales, utility, candy bars in my show

Licenses for dogs and cats, and that's not all you know

Out of almost every dollar a person can make

City, State and Federal governments take . . .

Take what?

What they think is fair you giving your share

Now and then there's a break

~Tax Man Max

School House Rock

Back about 10-15 years ago, when the Internet was young and online shopping was new, it didn't take long for people to realize that if you bought online, you wouldn't be charged sales tax. By the same token, state revenue departments realized that goods that were purchased from out-of-state vendors and not taxed affected the states' ability to raise money for state services. 

Lawyers who specialize in state taxation have been debating whether an out-of-state seller can be held responsible for collecting sales taxes on purchases made within a state for years. It really wasn't a matter of if the Supreme Court would take on this issue, but when.

The U.S. Supreme Court and the Constitution

For a case to get to the U.S. Supreme Court, it must have already been considered by lower courts. Lower courts may include Federal Courts of Appeal or State Supreme Courts. That's an over-simplification, but it works for our purposes. 

Once the parties have gone through the required lower courts, they may file a petition for writ of certiorari with the U.S. Supreme Court. Don't worry about the Latin, just know that the losing party asks the U.S. Supreme Court to consider the case.

The U.S. Supreme Court is the final authority in matters involving interpretation of the U.S Constitution. In Article I, Section 8, Clause 3, the Constitution grants Congress the power “[t]o regulate Commerce . . . among the several States.”  This is known as the Commerce Clause.

The Commerce Clause has been interpreted over the years to mark the boundaries of a state's authority to regulate interstate commerce. This means that state regulations may not discriminate against interstate commerce, and states may not impose undue burdens on interstate commerce. The Due Process Clause is also in play. Basically, due process requires that the government can't deny an individual the opportunity to have a hearing.

Because the Supreme Court is the final authority on the Constitution, other U.S. courts (whether state or federal) must follow its decisions. The Supreme Court generally must follow its own decisions, but there are occasions when the Supreme Court rules that they got it wrong or that the previous decision doesn't work anymore.

Sales Tax

Before there was online shopping, there was catalog and mail order shopping. The U.S. Supreme Court last considered whether an out-of-state seller is liable for the collection and remittance of state sales tax to the state where the buyer is located in 1992. In that case, Quill Corp. v. North Dakota, the Court held that the key for answering this question depended on whether the seller has a physical presence in the buyer's state. Further, the mere shipment of goods into the buyer's state, following an order from a catalog, did not constitute physical presence. Quill followed a 1967 case, National Bellas Hess, Inc. v. Department of Revenue of Ill.

As I mentioned above, lawyers who specialize in state taxation have been waiting for the Court to accept a case that could revisit the state taxation issue in light of the increase in online shopping. Finally, the Court accepted a case involving online retailers Wayfair, Overstock.com and Newegg Inc.

In South Dakota v. Wayfair, Inc., the Court overruled Quill and National Bellas Hess. The Wayfair  Court found that a retailer could have nexus with a state without having a physical presence. Thus, states can now require online retailers to collect taxes on online purchases, whether or not the retailer has any physical  connection to the state.

What the Wayfair Decision Means

More than most Supreme Court decisions, this ruling will impact just about everyone.

• It "levels the playing field" for brick-and-mortar retailers. In other words, a customer will be charged tax whether they purchase that book from Barnes and Noble or order it from amazon.com. Actually, Amazon is already collecting taxes on online purchases, but the example illustrates my point.
• States will now be able to collect tax from their residents who purchase items online, whether or not the retailer has a store, an office, or any other type of physical presence in the state. States have been scrambling to come up with ways to tax online sales, since they were losing revenue.
• In the short-term, stocks of online retailers, such as Amazon, Etsy, Overstock and Wayfair are also taking a hit, but within a few hours of the decision, stock prices for these companies seem to be creeping up again.
• For companies that use third-party online sellers (like Amazon), the ruling likely will open the door for retailers to be responsible for collecting tax from those third parties, too. This is already required in Washington and Pennsylvania.

Dissent

Justice Kennedy wrote the opinion for the majority. Justices Thomas, Ginsburg, Alito and  Gorsuch joined in the majority opinion. Chief Justice Roberts wrote a dissent, which Justices Breyer, Sotomayor and Kagan joined. However, the dissent didn't disagree with the result as much as they thought it was a matter for Congress to settle.

They say that the only things that are certain are death and taxes. I guess that makes free shipping all the more important!

Who Should Appoint the Next Supreme Court Justice?

If you’re going to be a good and faithful judge, you have to resign yourself to the fact that you’re not always going to like the conclusions you reach. If you like them all the time, you’re probably doing something wrong. 

~ Associate Justice Antonin Scalia

1936-2016

Just six weeks into the year 2016, and two deaths have caused me to stop and take notice. The first, Glenn Frey, one of the founding members of the Eagles (arguably the greatest band of all time), died on January 18th. The Eagles, a product of the 1970s, provided one of the most frequently quoted lines of a popular song, "You can check out any time you like, but you can never leave." Many hours have been spent trying to interpret the lyrics to that song. Was it meant to be taken literally or was it a commentary on the culture of excess prevalent in Hollywood in the 1970s?

The second death that was more than a passing news story was the death of Supreme Court Justice Antonin Scalia that occurred just in the past couple days. Justice Scalia also used words to generate thought, but, unlike Glenn Frey, his job was to provide the interpretation of what someone else wrote. Specifically, his job was to interpret the intent of the Constitution.

Justice Scalia's judicial philosophy was one of "originalism." He believed that the Constitution should be interpreted in terms of what the founding fathers intended when they ratified the document over 200 years ago. In 2013, he told an audience at Southern Methodist University that the Constitution is "not a living document" and is "dead, dead, dead." His belief of a dead Constitution clashed with the views of his more liberal counterparts and the more commonly held view that the Constitution is a "living document," allowing courts to take into account the views of contemporary society. He hated the concept of "judicial activism," and believed that the legislature was responsible for bringing about change.

Within hours of the announcement of his death, talk of his replacement had already reached a fevered pitch. Senate Majority Leader Mitch McConnell (R-Ky) declared that President Obama should forgo selecting a replacement and leave that to the next President who will be elected in November and inaugurated in January 2017. At the Republican debate in Greenville, S.C., candidates echoed the idea that the next President should select Scalia's replacement.

It doesn't take a Harvard Law degree to realize that they would they be singing a different tune if the current President were a Republican. Perhaps not as obvious, however, is that holding off on appointing a successor is contrary to Justice Scalia's firmly held beliefs.

Article II, Section 2, Clause 2 of the Constitution states:

[The President] shall nominate, and, by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

Justice Scalia probably would have put off retirement until at least after the next election when he would have known the political proclivities of the new President. He would have preferred that his successor lean more towards strict interpretation of the Constitution, rather than adapting it to fit with contemporary society. Still, he would not now read the clause above to include a "waiting period." On the other hand, Justice Scalia was in the minority on many recent Supreme Court decisions interpreting the Constitution, so maybe his beliefs should not enter into the discussion of his successor.

So, let's look at a source a little closer to home. On the website Congress.gov, there is the annotated Constitution. In other words, the Constitution is explained by citing various sources -- court opinions, Attorney General opinions, etc. There, you can find the following:

The bottom line: Congress cannot put conditions on Presidential appointments. Their job is to approve or reject the nominee put forth by the President.

One other point--Republicans seem to presuppose that the next President will be a Republican. However, with the possibility that one of the Democratic candidates may be elected, this may be a situation where they should be careful of what they wish for.

The Last Word ... Maybe

No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right.

Obergefell v. Hodges

Majority Opinion by Justice Anthony Kennedy

You might remember that there were several states and organizations that suggested that the Supreme Court ruling in Obergefell v. Hodges was not official until after the 25-day period for requesting rehearing had passed. That period elapsed on July 21, and after waiting another week for any requests that had been mailed, the Court issued its final order yesterday.

See Same-sex marriage ruling put into formal effect for more information on the final order and a link to the final order.

To read my earlier blogs about the Obergefell decision, see Goin' to the Chapel and We're Gonna Get Married and Wedding Bell Blues.

Wedding Bell Blues

Before the risin' sun, we fly

So many roads to choose

We'll start out walkin' and learn to run

And yes, we've just begun

Sharing horizons that are new to us

Watching the signs along the way

Talkin' it over, just the two of us

Workin' together day to day

Together

~The Carpenters

We've Only Just Begun

When the Supreme Court announced its decision finding that same sex couples had the right to marry (Obergefell v. Hodges), reaction around the country was predictably mixed. 

The White House was lit up in rainbow colors to commemorate the ruling. There were public celebrations outside the U.S. Supreme Court building, and around the country. U.S. and rainbow-striped flags were unfurled. Same-sex couples rushed to apply for marriage licenses. Finally, same-sex couples had the same rights as heterosexual couples. They would be eligible for the same spousal benefits, privileges and responsibilities that heterosexual couples had through marriage. Supporters of same-sex marriage declared that it was "a great day for America!"

Not everyone celebrated the decision, however. Some objected on moral grounds. Others worried about clergy being forced to go against their religious beliefs to perform marriages for same-sex couples. Many challenged the right of five lawyers to decide the issue, rather than allowing the people of each state to determine the definition of "marriage" for their state. Still others accused the Supreme Court of rewriting the Constitution. Some lamented that the world was coming to an end. Others worried that the next step would be polygamy.

One side of the debate posits that the framers of the Constitution did not intend to sanction same-sex marriage. They extend the argument to include the Fourteenth Amendment, which was adopted nearly 80 years after the Constitution. The other side of the debate points out that the Constitution was intended to be a malleable document that could be adapted with time.

Much of the same-sex marriage debate centers on the Fourteenth Amendment, which states that no state shall "deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." Due process? Equal protection? What in the world does that mean?

The key phrase here is "equal protection." Merriam-Webster defines equal protection as "a guarantee under the Fourteenth Amendment to the United States Constitution that a state must treat an individual or class of individuals the same as it treats other individuals or classes in like circumstances." In relation to marriage, the Court read this to mean that same-sex couples who want to marry are a class of individuals who must be treated the same as heterosexual couples, another class of individuals, who want to marry.

The States Respond

Nearly one month after the Supreme Court ruling, the debate has not quieted, particularly in the following states:

Alabama--The Alabama Supreme Court responded to Obergefell by issuing an order suspending same-sex marriages in Alabama for 25 days to give parties time to file motions addressing the ruling. As the 25-day period passed, at least nine Alabama counties were refusing to issue marriage licenses to any couples, gay or heterosexual, according to a survey by The Associated Press. 

Louisiana--After the U.S. Supreme Court ruling in Obergefell, the Louisiana attorney general, Buddy Caldwell, said that nothing in the decision required the State to cease enforcing its same-sex marriage ban immediately. Gov. Bobby Jindal twice delayed the recognition of same-sex marriage by the Louisiana state government by waiting for lower courts to specifically rule on Louisiana's definition of marriage as between one man and one woman. However, as of July 6, all parishes in the Louisiana must issue marriage licenses to all couples.

Tennessee--Gov. Bill Haslam and Attorney General Herbert Slatery III said they would respect the Court’s decision, although they said it robbed Tennesseans of their voice and vote. Legislators in the State, however, are not as accepting. Some want the State to consider allowing state employees who object to same-sex marriage to refuse to serve same-sex couples. Others are planning legislation to protect pastors from being forced to officiate same-sex marriages, although neither state nor federal law requires clergy to officiate any wedding.

Texas--By far, the most resistant state is Texas. Texas Attorney Gen. Ken Paxton sent out a letter informing state officials that they had the option of not complying with the Supreme Court's ruling if they so choose. Sen. Ted Cruz claimed that the Supreme Court decision was only binding for the parties directly involved in the case. (This is simply wrong.) Cruz went on to suggest another Constitutional amendment that would make members of the Supreme Court subject to retention elections.

County clerks found various ways to avoid issuing marriage licenses, from suggesting that they needed to get paperwork in order to resigning, quitting or, in one case, retiring. One county judge created a form that same-sex couples would have to sign acknowledging that the judge does not want to conduct same-sex marriages and that the couple agrees not to discuss the topic of same-sex marriages with the judge before, during or after the ceremony.

And the rest--Officials in Arkansas, Georgia, Kentucky, Mississippi, Nebraska, North Dakota, Ohio and South Dakota begrudgingly accepted the Court's ruling, but made clear their disagreement with the Court. Many expressed the belief that the Court had overstepped its authority and that the issue should have been left to the states to decide. Several states claimed that the ruling was not immediately effective.

Religion

It should come as no surprise that many religious denominations oppose same-sex marriage. Among the religions formally opposed to same-sex marriage: Mormonism, Catholicism, Lutheran Church-Missouri Synod, the majority of Evangelical churches, Orthodox Judaism and Islam.

In recent years, some Christian denominations have voted to allow their clergy to perform same-sex weddings. This includes the Episcopal Church, the Presbyterian Church and the Evangelical Lutheran Church. In addition, the Conservative and Reformed Judaism Movements sanction same-sex marriage.

Other religious groups, including my own, are sharply divided on the subject of same-sex marriage. United Methodist Clergy have been making headlines for violating church rules by performing same-sex marriage or civil union ceremonies since the late 1990s. However, at its most-recent General Conference in 2012, the worldwide church voted to continue its stance on homosexuality and same-sex marriage. For more on the debate within the United Methodist Church, see How the Supreme Court Gay Marriage Ruling Could Destroy the United Methodist Church and Will Same-Sex Marriage Split the United Methodist Church? 

Goin' to the Chapel and We're Gonna Get Married

He is now to be among you 
at the calling of your hearts

Rest assured this troubadour 
is acting on His part.

The union of your spirits, here,
 has caused Him to remain

For whenever two or more of you 
are gathered in His name

There is love, there is love.

~The Wedding Song (There Is Love)

Peter, Paul & Mary

Nearly a month ago, the U.S. Supreme Court ruled that same-sex couples have the right to marry in the United States. A majority of five justices found that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state. 

The Right to Marry

This is not the first time that the Court has found that a specific group of people had a right under the Fourteenth Amendment to marry.

Loving v. Virginia (1967): In 1958, a couple of high school sweethearts left their home state and traveled to Washington, D.C., so that they could legally marry. After they returned to their home in Virginia, both were arrested for "cohabiting as man and wife, against the peace and dignity of the Commonwealth." Subsequently, Richard and Mildred Loving pleaded guilty to violating Virginia's law prohibiting interracial marriage. Their one-year jail sentence was suspended for 25 years on the condition that they left the state, which they did.

Forty-eight years before the U.S. Supreme Court found that same-sex couples have a Constitutional right to marry, the Court (in 1967) legalized interracial marriage in a unanimous decision. At the time, the subject of interracial marriage was nearly as contentious as same-sex marriage is today. In fact, 17 southern states had laws prohibiting interracial marriage.

Where are they now? Mildred Loving Obituary

Baker v. Nelson (1972): In 1970, two University of Minnesota gay student activists, Richard Baker and James Michael McConnell, applied for a marriage license in Minneapolis. County Court Clerk Richard Nelson refused to issue a marriage license to a same-sex couple. 

In its decision upholding the county's refusal to issue a marriage license to the couple, the Minnesota Supreme Court focused on the function of marriage to procreate and rear children within a family. They distinguished the Loving case saying, "But in commonsense and in a constitutional sense, there is a clear distinction between a marital restriction based merely upon race and one based upon the fundamental difference in sex."

When the couple appealed to the U.S. Supreme Court, it, in effect, upheld the Minnesota court when it issued a one-sentence opinion dismissing the case  question"for want of a substantial federal."

Where are they now? Richard Baker and James McConnell

Zablocki v. Redhail (1978): A Wisconsin statute required non-custodial parents who wanted to marry to get a court order to receive a marriage license, and the marriage license would not be issued if the non-custodial parent owed child support. The U.S. Supreme Court found that the statute violated the Fourteenth Amendment's equal protection clause. 

Turner v. Safley (1987): A Missouri prison regulation that prohibited inmates from marrying without the permission of the warden was unconstitutional. Once again, the Court said that the right to marry is a fundamental right protected by the due process clause.

Same-Sex Marriage: Windsor and Obergefell

United States v. Windsor (2013): In 1996, the Defense of Marriage Act (DOMA) became law. DOMA defined "spouse" and its related terms to signify a heterosexual couple in a recognized marriage. Thus, DOMA meant that the federal government would not recognize a same-sex marriage. 

In Windsor, the Court found DOMA's definition of marriage unconstitutional under the Fifth Amendment Due Process Clause's guarantee of equal protection. The federal government must recognize same-sex marriages that have been approved by the states.

Obergefell v. Hodges (2015): Obergefell did for same-sex marriage what Loving v. Virginia did for interracial marriage. It held that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state. 

The majority opinion, written by Justice Kennedy, explained that same-sex couples sought the same privileges and responsibilities that heterosexual couples sought through marriage. They described the history of marriage as one of evolution and change. Plus, they looked at previous cases, particularly Loving, where the Court found that a particular group of people had a right to marry under the Fourteenth Amendment to the Constitution.

The justices who disagreed with the decision did not voice opposition to same-sex marriage, but instead accused the majority of taking the decision-making power out of the hands of the people. Justice Scalia called the decision a "threat to American democracy." Justice Thomas said the decision was contrary to the intent of the framers of the Constitution, and Justice Alito said that the decision would be used to vilify Americans who are “unwilling to assent to the new orthodoxy.”