Update to Texas Jumping on the Economic Nexus Bandwagon!
Earlier this year, the Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc., which made it easier for companies to create nexus in states. In turn, this made it easier for states to collect revenue from companies doing business in these states.
In a previous blog, we reported that Texas is making plans to join many other states by jumping on board the economic nexus bandwagon. The Texas comptroller recently unveiled plans to move this legislation forward.
The New Legislation in Texas
Even though Texas has been moving cautiously in the move toward economic nexus, it is moving a little bit closer. Texas, one of the largest states and popular states for companies to do business in, has finally made plans to enact economic nexus legislation.
States' Reactions to Online Sales Tax: What You Need to Know
If you’ve been following the Wayfair case, you know the Supreme Court upheld South Dakota’s online sales tax legislation (related to economic nexus), creating precedent for other states to create and implement similar measures. But, as we explained in our last blog post, this doesn’t automatically mean all 50 states are charging taxes on internet purchases.
Which states are now collecting online sales tax, and how does this new ruling affect residents in states without sales tax? Keep reading to find out how some states are reacting to the Supreme Court’s ruling.
More States Begin Collecting Online Sales Tax
It’s not surprising that states are scrambling to create internet sales tax legislation to increase revenue as quickly as possible. As of October 1st, ten states joined the ranks of those requiring collection of sales tax if certain economic nexus thresholds are met:
- Alabama
- Illinois
- Indiana
- Kentucky
- Michigan
- Minnesota
- New Jersey
- North Dakota
- Washington
- Wisconsin
North Carolina, Connecticut, Georgia, Iola, Louisiana, Nebraska and Utah have legislation in place to require sellers to begin collecting taxes in the coming months, too.Read more
THE WAYFAIR CASE CONTINUES TO MAKE HEADLINES
It’s been over three months since the Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc., which made it easier for companies to create nexus in states. In turn, this made it easier for states to collect sales tax revenue from companies doing business in the state.
The Supreme Court’s ruling did not automatically make this the law of the land for all 50 states. The high court’s decision was that South Dakota’s economic nexus law was constitutional. Since this ruling, states have been jumping on the economic nexus bandwagon by enacting similar legislation. As we describe in a recent blog, economic nexus is based upon the amount of sales or number of transactions in the state. If a certain threshold is met, nexus is deemed to be created.
FOCUS ON KANSAS
This month brings us to the center of the country, the Great Plains state of Kansas. Kansas is a Midwestern state that epitomizes the U.S. Heartland with its Great Plains setting of rolling wheat fields. The Museum of World Treasures in Wichita, the state’s largest city, covers world history from dinosaurs to Elvis, while the open-air Old Cowtown Museum highlights the city’s pioneer past. In nearby Hutchinson, the Cosmosphere displays the Russian Vostok and Apollo 13 spacecrafts.
For thousands of years, what is now Kansas was home to numerous and diverse Native American tribes. Tribes in the eastern part of the state generally lived in villages along the river valleys. Tribes in the western part of the state were semi-nomadic and hunted large herds of bison.
Congress' New Online Sales Tax Bill: What You Need to Know
As we wrote a couple of weeks ago, the online sales tax debate is far from over. Although the Supreme Court ruled that states can impose an internet sales tax, Congress can still legislate on the issue. And it looks like it will. Representatives introduced a bill designed to guide sales tax collection requirements for businesses selling across state lines.
About the Online Sales Tax Bill
Introduced by a bipartisan group of House Representatives, the Online Sales Simplicity and Small Business Relief Act was created to provide clarity amidst the confusing aftermath of the Wayfair decision.
As U.S. Representative Sensenbrenner explained in a statement, “This bipartisan legislation reins in the taxation free-for-all created by the Supreme Court’s ruling…online sellers need clarity and stability in the sales tax arena. Our bill will protect small businesses and internet entrepreneurs from excessive regulatory burdens.”Read more
The Crazy Tax Laws Regarding Food!
We write a lot of blogs! We’ve been writing a lot of blogs about the recent U.S. Supreme Court decision in South Dakota v. Wayfair and how companies selling goods online will be subject to much more compliance in upcoming months and years. But today, we decided to change it up and talk about something near and dear to everyone- food!
In most states throughout the country, consumers shopping at a supermarket don’t pay state sales tax on their bread and butter, but would pay sales taxes on a hot prepared turkey dinner. If they pick up a Hershey’s bar in the checkout line, is likely to be taxed, but if they pick up a Twix bar instead, it might be be exempt.
What Are The Next Steps Regarding Internet Sales Tax?
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.Read more
FOCUS ON NORTH DAKOTA
This month we travel to the Great Plains state of North Dakota. It is the 19th largest in area, the 4th smallest by population, and also the 4th most sparely populated of the 50 states. North Dakota is situated near the middle of North America with a stone marker in Rugby, North Dakota marking the “Geographic Center of the North American Continent.”
The western half of the state consists of the hilly Great Plains as well as the northern part of the Badlands, which are to the west of the Missouri River. The region is abundant in fossil fuels including natural gas, crude oil and lignite coal. The Missouri River forms Lake Sakakawea, the third largest artificial lake in the U.S.
FOCUS ON INDIANA
This month we travel to the Crossroads of America, the Midwest state of Indiana. It is known for its farmland and renowned auto race, the Indianapolis 500, held at the Indianapolis motor speedway. In the capital, Indianapolis, theatres and galleries line Massachusetts Avenue. The city’s downtown is home to the iconic Soldiers and Sailors Monument, the Canal Walk promenade and the Indianapolis Museum of Art and its wide-ranging collections.
The state includes two natural regions of the United States: the Central Lowlands and the Interior Low Plateau. The Till Plains make up the northern and central regions of Indiana. Much of its appearance is a result of elements left behind by glaciers. Central Indiana is mainly flat with some low rolling hills (except where rivers cut deep valleys through the plain, like at the Wabash River and Sugar Creek) and soil composed of glacial sands, gravel and clay, which results in exceptional farmland. Northern Indiana is similar, except for the presence of higher and hillier terminal moraines and hundreds of Kettle lakes.
U.S. SUPREME COURT SALES TAX DECISION (WAYFAIR)- Q&A PART 2
If you’re a frequent reader of this blog (or you’ve just been scanning headlines), you know that the hot news in the sales tax world is the recent U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, Inc. This ruling overturned the high court’s 1992 decision in Quill (Quill Corp v. North Dakota, 504 U.S. 298 (1992)), which established a physical presence standard before a state could enforce sales tax collection responsibilities on a seller. With the Wayfair decision, the Supreme Court effectively ruled that another indicator of sufficient presence in a state is “economic nexus”. Essentially that means that a certain dollar volume or number of transactions in a state can create nexus and therefore a responsibility on the seller to collect and remit sales tax. In the South Dakota statute, those amounts are SD sales in excess of $100,000 or 200 transactions in the state within a year.
In the last month, we’ve received many questions from our clients and referral partners about what this really means for them and what they should be doing next. We addressed a few of those questions in a previous blog and here, we tackle a few more.
