It’s been a few months since the Supreme Court’s Wayfair v. South Dakota decision made it possible for states to begin imposing an internet sales tax, but there are still a lot of questions swirling around – especially for small businesses owners.
U.S. House Judiciary Committee Hearing: Internet Sales Tax
Digital Commerce 360 reports that following the Court’s decision the U.S. House Judiciary Committee heard testimony, “Spanning the spectrum of opinion on the potential fallout of the U.S. Supreme Court’s decision regarding online sales tax.” Eight citizens from a range of backgrounds provided expert insight on how the Wayfair decision would impact states and businesses across the country.
Ultimately, the testimony encouraged Congress to develop internet sales tax legislation to provide clarity as retailers attempt to figure out how to comply with each states’ various tax laws.
While Congress struggles to come to a consensus on what this type of law would look like, states are enacting their own online sales tax laws. This leaves business owners scrambling as they try to figure out what to do.
One witness, Chad White, owner of an online merchant of reproduction automotive parts, expressed concerns over complaints, costs and potential out-of-state audits, while other retailers are considering software that will automate the work of calculating and remitting online sales tax. And other witnesses claimed Congress should find a way to block states from collecting taxes altogether until legislation is passed.
The Internet Sales Tax Debate Continues
It’s clear that, despite the Court’s decision, the internet sales tax debate is far from over. While the eight witnesses at the hearing provided a wide range of considerations for the Judiciary Committee, there are still a lot of opinions as to how Congress should act in regards to online sales tax. Should all small businesses be exempt, or is it better for there to be a standard minimum sales threshold like many states are including in their various laws? Or, should Congress take it a step further and pass legislation that prohibits internet sales tax altogether?
What will the next steps look like for companies affected by the Wayfair decision? Time will tell. As Judiciary Committee chairman Bob Goodlatte explained, “The Court’s close and incomplete decision in Wayfair has the potential to unleash chaos for consumers and remote sellers, particularly small business sellers…with so many unanswered questions, both sellers and states need time to figure out how to proceed.”
In the meantime, we recommend businesses do some research to see if and how they may be liable for state sales taxes. Also, be aware that internet sales tax doesn’t only affect online retailers; it impacts any sellers that conduct business across state lines including those selling manufacturing equipment, large items of tangible property, software and even SaaS.
Stay tuned as we continue to see how online sales tax unfolds! Please also contact us if you need any help figuring out how the Wayfair ruling may affect your business, and how to ensure you’re in compliance. We’re happy to assist with internet sales tax or any other multi-state tax issue you may be facing!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects. To learn more, contact us today at www.MilesConsultingGroup.com.
