Law360 Spotlights Bill Nelson’s Amicus Brief to U.S. Supreme Court on N.C. Sales Tax Decision

A 1944 United States Supreme Court tax ruling could have ramifications in a future U.S. Supreme Court decision, as Law360 and the Carolina Journal report in the articles “Biz Group Urges High Court to Review NC Sales Tax Ruling” and "Nation’s Highest Court Could Take Up NC Sales Tax Dispute" that examine an amicus brief that Smith Anderson attorney Bill Nelson presented to the nation’s highest court on behalf of the North Carolina Chamber Legal Institute. 

Law360 quoted Bill in the article about the institute’s bid to convince the U.S. Supreme Court to review a North Carolina Supreme Court decision that effectively overruled a 1944 United States Supreme Court precedent that limits states from imposing their sales tax on out-of-state sales. The North Carolina Chamber Legal Institute is the North Carolina business community’s organized voice for legal policy development and analysis.

The brief argues that the N.C. Supreme Court had no right to treat the 1944 decision, McLeod v. J.E. Dilworth Co. as a dead letter when the court ruled in December in favor of the N.C. Department of Revenue, which had imposed sales tax on sales made outside North Carolina by a Wisconsin company, Quad Graphics. The North Carolina justices said the Dilworth case did not matter, according to the institute, and Quad Graphics has argued in a petition to the U.S. Supreme Court that the state could have imposed its use tax on the items sold, but not sales tax.

"Requiring state appellate courts to respect Supreme Court precedents until this court clearly disavows them is essential to our constitutional order," Bill’s brief says. "Failure to address the North Carolina Supreme Court's challenge will seriously erode this court's authority, the integrity and good order of the legal system and constitutional protections against administrative overreach.”

State courts simply cannot be allowed to "decide for themselves" when a U.S. Supreme Court precedent is no longer good law, Bill wrote. He described this as "anticipatory overruling" and said that if practiced routinely, it would lead to chaos, Law360 reports.

In the 1989 case Rodriguez de Quijas v. Shearson/American Express Inc., the U.S. Supreme Court warned other courts to "[leave] to this court the prerogative of overruling its own decisions," Bill noted in the brief.

"This court would find its time consumed with policing the lower state and federal courts," Bill wrote. "A policy of tolerating such speculation would be inherently subject to abuse."

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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