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Legal Corner
AAC GOVERNMENTAL AFFAIRS
Ballot Issues: What are you voting on?
The Arkansas Constitution allows the General Assembly to propose up to three constitutional amendments for Arkansas voters to decide. In resolution form, these are vetted in the Joint House and Senate State Agencies committee. In 2017, the Senate filed 14 senate joint resolutions (SJR); the House filed 22 house joint resolutions (HJR). The joint committee, then both chambers of the legislature, approved HJR1016 and SJR8. These resolutions are on the ballot for the 2018 general election as Issues 1 and 2.
Issues 3, 4 and 5 — all proposed constitutional amendments — qualified to be on the ballot via a petition process that requires citizens to gather signatures from a minimum of 10 percent of those who cast a vote for governor in the last election.
At press time, all of these issues are being challenged in court.
The University Of Arkansas Division Of Agriculture, Research and Extension, Public Policy Center has released its 2018 voter guide, “Arkansas Ballot Issues.” The guide (found at www.uaex.edu/ballot) is the most comprehensive resource in the state for a neutral analysis of ballot issues. The following descriptions of the issues come from the guide.
Issue 1
This amendment proposes four changes to the Constitution. • It would add a section regarding contingency fees to Article 7 (Judicial Department). Attorneys could not collect a contingency fee more than 1/3 of the net amount of money a client receives in a civil lawsuit, and the 92nd General Assembly would have to pass laws implementing the section, such as establishing penalties for collecting fees higher than allowed. • There would be several changes to Section 32 (Workmen’s Compensation Laws — Actions for Personal Injuries). It would define “non-economic damages” and “punitive damages”; establish a maximum amount of money (the greater of $500,000 or three times the compensatory damages awarded) a person receives as punitive damages in a lawsuit related to injuries resulting in death, or injuries to person or property; establish a $500,000 maximum an injured person or his/her beneficiaries combined can receive as non-economic damages in a lawsuit related to injuries resulting in death, or injuries to person or property; allow legislators to increase maximum amounts for non-economic and punitive damages in the future with a 2/3 vote of each house; and require the state legislature in 2019 to create a procedure to adjust the punitive and noneconomic limits in future years for inflation or deflation. • The proposal also would change Section 3 (Rules of Pleading, Practice, and Procedure) of Amendment 80 (Qualifications of Justice and Judges). The legislature could amend or repeal a rule of pleading, practice, or procedure established by the Supreme Court with a vote of 3/5 of each chamber. The legislature also could create a rule of pleading, practice or procedure with a vote of 3/5 of each chamber. • The proposal would change Section 9 (Annulment of Amendment of Rules) of Amendment 80 (Qualifications of Justice and Judges) by lowering the number of votes needed by legislators from 2/3 to 3/5 to abolish or change rules established by the Supreme Court related to Court of Appeals, Circuit Courts, District Courts and “referees, masters and magistrates.”
Josh Curtis Governmental Affairs Director
Issue 2 “A constitutional amendment adding as a qualification to vote that a voter present certain valid photographic identification when casting a ballot in person or casting an absentee ballot.”
Issue 2 is a simple question of whether you believe a voter should show photo identification before voting. A “for” vote means you are in favor of changing the Constitution to include the presentation of photo ID as a qualification to vote in Arkansas. The state would provide voters with qualifying photographic ID cards at no charge if they do not have one that meets requirements. An “against” vote means the exact opposite.
Issue 3 “Arkansas term limits amendment.”
This proposal would reduce the number of terms legislators could serve and prohibit legislators from proposing constitutional amendments to change term limits for the General Assembly.
Issue 4
“An amendment to require four licenses to be issued for casino gaming at Casinos, one each in
Crittenden (to Southland Racing Corporation), Garland (to Oaklawn Jockey Club, Inc.), Pope, and Jefferson Counties.”
A “for” vote means you are in favor of authorizing four casinos in the above-mentioned locations. Fifty-five percent of revenues would go to the state general revenue fund. The governor and legislature would decide how to spend these dollars.
Issue 5 “An act to increase the Arkansas minimum wage.”
This is a proposal to increase the minimum wage to $11 per hour by 2021.
South Dakota v. Wayfair, Inc.: A win for marketplace fairness, an open path for Arkansas
On June 21, 2018 the Supreme Court of the United States issued an opinion in the landmark case, South Dakota v. Wayfair, Inc., Et. Al., making it clear that, if certain criteria are followed, states may legally require out-of-state companies to collect and remit state and local sales tax on online purchases, so long as they maintain a “substantial nexus” within the taxing state. Lawmakers and in-state retailers have argued in years past that out-ofstate companies that do business in Arkansas were receiving an unfair advantage by not having to collect and remit sales taxes on online sales that companies with an in-state physical presence are required to collect. The Wayfair decision places Arkansas in a very favorable position to begin the enforcement of sales tax collections on online sales from out-of-state retailers.
In 2017, former Arkansas State Sen. Jake Files sponsored Senate Bill (SB) 140, co-sponsored by Rep. Dan Douglas, along with Senators Dismang, Teague, Sample and Rapert, that would have required the collection and remission of sales taxes to the state from outof-state retailers that on an annual basis either exceeded gross sales receipts of $100,000 or sold and delivered goods into the state through at least 200 transactions. It is worth noting that individual tax-paying Arkansans are already required by law to report sales taxes owed on their online purchases on their individual state income tax returns. However, the reporting process is cumbersome and very few Arkansans have complied with this requirement. SB140 would have required out-ofstate companies that meet the substantial nexus requirements to collect sales taxes on their internet sales from Arkansans, and relieve the burden of individual reporting. With official endorsements from both the County Judges Association of Association as well as the Arkansas Association of Quorum Courts, the bill passed in the Senate, passed out of the House Revenue and Taxation Committee, but failed to pass on the floor of the House of Representatives with 43 Yeas, 50 Nays, and 7 not voting.
One of the primary arguments in opposition of SB140 was that the bill was unconstitutional under current federal law, based on United States Supreme Court precedents, National Bellas Hess, Inc. v. Dept. of Revenue of Ill. (1967) and Quill Corp. v. North Dakota (1992), which required a company to have a physical presence in a state before the state could enforce its collection of sales taxes. SB140 died at sine die adjourn-
ment of the 91st General Assembly on May 1, 2017. South Dakota’s bill nearly identical to SB140, S.B. 106, did pass in 2016 and was challenged in court by a group of large online retailers, led by Wayfair, Inc. S.B. 106 also required a substantial nexus of either $100,000 in gross sales or over 200 transactions of goods sold and delivered in the state. Technically, the Supreme Court did not uphold S.B. 106, but remanded the case back to the South Dakota Supreme Court, stating that Bella Hess and Quill were overruled, and that the South Dakota Supreme Court should re-evaluate the law under the standard of “whether the tax applies to an activity with a substantial nexus with the taxThe Wayfair decision places Arkansas in a very favorable position to begin the enforcement of sales tax ing state.” The U.S. Supreme Court went even further to direct the lower court that collections on online sales from out-of-state retailers. “Here, the nexus is clearly sufficient.” Arkansas, a party to the Streamlined Sales and Use Tax Agreement, like South Dakota as noted by the Court, currently sits in a good position to pass a bill like SB 140 in the 92nd General Assembly, which convenes in January 2019. The Arkansas Department of Finance and Administration (DFA) has pointed out at meetings of the Tax Reform and Relief Legislative Task Force that Amazon, along with several other online retailers, are already voluntarily registered and paying Arkansas sales tax under the Streamline Sales and Tax Use Agreement, having signed on in anticipation of the Wayfair decision. As a result, projections regarding the increase in revenues that a bill like SB140 would bring have become more conservative. According to DFA, the state has already collected over $100 million from voluntarily registered online retailers. By DFA’s projections, enacting a law like SB140 to compel other qualifying online retailers to collect would bring an additional $35.3 million in estimated revenues to state and local governments combined. This is still a significant amount of sales tax revenues that are rightly owed to the state and local governments, and county and district elected officials will need to remain vigilant in their advocacy for online marketplace fairness. With the U.S. Supreme Court paving the way via South Dakota v. Wayfair, the path to marketplace fairness is more attainable than ever before, and Arkansas certainly should not be left behind.
LINDSEY BAILEY General Counsel
