2016
Eisenstein Argues Economic Nexus Challenge Before Ohio Supreme Court
On May 3, B&I senior partner Martin Eisenstein argued before the Ohio Supreme Court on behalf of retailers Newegg Inc., Crutchfield Inc., and The Mason Companies, in a constitutional challenge to the gross receipts nexus standard of the Ohio Commercial Activity Tax (CAT). Eisenstein was joined by partners David Bertoni and Matthew Schaefer as co-counsel on the cases. Eisenstein told the Court that the CAT’s $500,000 “bright line presence” standard is at odds with a long line of Supreme Court cases establishing the “substantial nexus” test for gross receipts taxes under the Commerce Clause that culminated with Tyler Pipe Industries, Inc. v. Washington State Dep’t. of Revenue, 487 U.S. 232 (1987). Eisenstein further explained that the Commerce Clause sets limitations on state taxing authority in order to protect interstate commerce. Under the Commerce Clause, he noted, Congress has the responsibility for determining the proper balance between a free-flowing national marketplace and the interests of states in taxing commerce that crosses state lines. Thus, Eisenstein emphasized, it is not the role of a single state to blaze new trails in taxing Internet retailers and other remote sellers, as Ohio has sought to do with the CAT.
A decision in the case is expected later this year.
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