Brief of Amici Curiae Tax Law Professors for the South Carolina Supreme Court in Support of Respondent

Abstract

In this appeal, Petitioner Amazon Services, LLC challenges the holding of the Administrative Law Court, as affirmed by the Court of Appeals, that Amazon is a “retailer” or “seller” under the South Carolina tax statute that was in effect prior to 2019. That holding properly confirmed the authority of Respondent South Carolina Department of Revenue to collect sales tax from Amazon for retail sales of third-party merchant-owned products on Amazon’s website. Amazon has attempted to advance an ahistorical, one-size-fits-all litigation and business strategy that has worked for Amazon in other states—but it has done so here with little or no regard for the specific legal context in South Carolina. We provide some background regarding: (1) the breadth and strength of South Carolina’s long-standing sales tax statute; (2) the state and national legal context that allowed Amazon to establish a physical nexus in South Carolina without (at least initially) simultaneously subjecting Amazon to state sales tax obligations required by the state’s broad statute; (3) how states similarly-situated to South Carolina have addressed Amazon’s attempts to avoid sales tax obligations; and (4) key policy considerations relevant to the case, including one advanced by United States Supreme Court Justice Gorsuch, characterizing the use of physical nexus to avoid sales tax obligations as a “judicially created tax break.” We felt compelled to become involved in this litigation in the first instance because failure to collect sales tax from Amazon for the sales at issue here would constitute a judicially created tax subsidy for Amazon, and would create a “playbook” for any taxpayer with deep pockets to litigate their way out of South Carolina tax liability.

Keywords: tax, tax policy, south carolina, department of revenue, amazon, wayfair, sales tax