The South Carolina Court of Appeals has granted motions to 10 business and trade associations to appear as amici in support of the marketplace facilitator in Amazon Services LLC v. South Carolina Department of Revenue.
The court on June 30 granted motions by six organizations to appear as amici and accepted briefs in support of Amazon Services filed by the U.S. Chamber of Commerce and by the South Carolina Manufacturers Alliance. Four organizations joined the chamber’s brief: the Business Roundtable, the Greater Columbia Chamber of Commerce, the Internet Association, and the South Carolina Chamber of Commerce.
The Council On State Taxation, the Institute for Professionals in Taxation, the Tax Executives Institute, and the National Retail Federation had separately filed amicus briefs in support of Amazon Services.
It has been more than a year since the case was fully briefed by the parties. The DOR in December 2020 called one of the amici filings “little more than a ‘friend of Amazon’ brief, not a ‘friend of the Court’ brief” and took issue with the fact that amici did not seek leave to appear in the case until six months after the case was fully briefed by the parties.
The court’s assignment of the matter was delayed in 2020 because of the pandemic. Staff attorneys with the court have yet to recommend whether the case should be submitted on the briefs or there should be oral argument — and it will still be some time before that happens.
Aside from the open window for DOR responses and amici replies to the newly accepted briefs, there is another potential delay looming in this case. The court requires at least one bound copy of each brief filed, but because of the pandemic, the court for a time in 2020 discouraged the filing of any hard copies — and it is possible that this case is one of those in this spot, according to the clerk’s office.
If so, then after the amici filings-responses-replies process is complete, the court will send letters requesting a final bound copy of each brief filed. When those are in, staff will screen the case and recommend whether the court should hold oral argument.
Amazon Services is appealing the Administrative Law Court’s September 10, 2019, final order and decision upholding the DOR’s assessment of sales tax on Amazon for third-party sales made in the state during the first quarter of 2016. In the 54-page decision, Chief Administrative Law Judge Ralph King Anderson III concluded that the contractual arrangement between Amazon Services and its marketplace sellers “functions as a consignment-type relationship” for purposes of collecting South Carolina sales and use tax and that the marketplace facilitator is the retailer legally liable for collecting tax on the third-party sales.
Among the arguments made in the U.S. Chamber of Commerce’s amicus brief, prepared by attorneys with Haynsworth Sinkler Boyd PA, is that at the time of the marketplace sales at issue, “neither the General Assembly nor DOR had publicly promulgated the rule that DOR now seeks to impose, thus blindsiding Amazon Services” with the assessment.
Among the arguments made by the South Carolina Manufacturers Alliance in its brief, prepared by attorneys with Eversheds Sutherland (US) LLP, is that the DOR “should not be allowed to retroactively replace its longstanding policy, practice, and interpretation of a tax statute with its audit position.”
The DOR in April filed its its most recent response to an amici, addressing retroactivity arguments made by the National Retail Federation in a brief prepared by attorneys from McDermott Will & Emery. The DOR argues that not only did it not retroactively apply a tax obligation on the marketplace facilitator but also that Amazon Services was aware that existing South Carolina law obligated it to collect and remit these taxes and sought a statutory moratorium that delayed this obligation from 2011 through 2015.
“Respectfully, the issues of substance in this appeal and which merit this Court’s attention have already been fully briefed by Amazon and the Department,” the DOR said. Echoing statements it has made in every response to date in the case, the DOR asked the court to disregard amici commentary that “adds nothing to this analysis.”
In Amazon Services LLC v. South Carolina Department of Revenue (No. 2019-001706), Amazon Services' representation includes attorneys from Nelson Mullins Riley & Scarborough LLP and Sidley Austin LLP’s Washington and Chicago offices.
Attorneys representing South Carolina include the DOR general counsel and attorneys from Willoughby & Hoefer PA and the Acquaviva Law Firm LLC.