The Latest in Online Sales Tax: Wayfair vs. South Dakota Oral Arguments
Last week the U.S. Supreme Court heard oral arguments in the Wayfair v. South Dakota online sales tax case. While the court’s decision regarding the matter isn’t expected until June, the Justices’ questions in the matter reveal that it’s far from already settled, and they’re divided on whether or not Quill should be overruled.
South Dakota’s Arguments Regarding Quill
South Dakota’s Attorney General Marty Jackley began his statement, "First, our states are losing massive sales tax revenues that we need for education, health care, and infrastructure. Second, our small businesses on Main Street are being harmed because of the unlevel playing field created by Quill, where out-of-state remote sellers are given a price advantage."
In response, Justice Sonia Sotomayor shared her concern that overturning the precedent could create a large number of lawsuits. While South Dakota's 2016 law makes it clear that retailers doing business in the state will not be liable for sales tax due before the law went into effect, not all states have legislation in place to protect online retailers from retroactive sales tax.Read more
FOCUS ON ARKANSAS
This month we travel to the southern state of Arkansas, the Natural State. It is known for its abundant parks and wilderness areas, with terrain encompassing mountains, caves, rivers and hot springs. The rugged Ozarks region in the northwest portion of the state has hiking trails and limestone caves, such as Blanchard Springs Caverns.
The state’s diverse geography varies from mountain ranges from the Ozark and the Ouachita Mountains, which make up the U.S. Interior Highlands, to the densely forested land in the south known as the Arkansas Timberlands, to the eastern lowlands along the Mississippi River and the Arkansas Delta.Read more
Wayfair Files Online Sales Tax Legal Brief: What You Need to Know
If you've been following the online sales tax debate with us, you know the Wayfair v. South Dakota case is going before the U.S. Supreme Court shortly; oral arguments are scheduled for next week (April 17).
In the meantime, Wayfair has filed a legal brief along with two other online retailers: Overstock Inc. and Newegg Inc. Keep reading for a brief summary of their argument for maintaining the Quill ruling from 1992.
Wayfair’s Brief Against Online Sales Tax
While South Dakota is hoping the Supreme Court overturns Quill so that it can collect sales tax from online retailers, major online companies across the country argue it would hurt business nationwide.
As the legal brief filed by online retailers explains, "Sales tax collection at the state level, 'would prove particularly burdensome for smaller and medium-sized retailers that lack internal systems for multi-state tax compliance. Many of the largest internet retailers, meanwhile, already collect the tax at rates approaching traditional bricks-and-mortar sellers.'"Read more
Pennsylvania and the Economic Nexus Bandwagon- No April Fools!
As you know from reading our blogs, multistate tax can be difficult to navigate! When businesses sell their products across state lines, they need to think about whether they have taxable presence, or nexus, in the state and if their products are taxable.
Generally companies establish nexus by having a physical presence in the state. However, several states have recently been pushing the boundaries of defining the physical presence notion in order to generate more revenue. The concept of “economic nexus” is gaining greater momentum.
This Year's Omnibus Bill: What About Internet Sales Tax?
Last week Congress passed the 2018 omnibus spending bill after finalizing the language at the last minute. Lawmakers on both sides of the aisle, specifically Rep. Kristi Noem, were pushing to include online sales tax legislation, but ultimately the House's chief deputy whip, Rep. Patrick McHenry, "Signaled...that Noem’s measure won’t be included in the omnibus and hasn’t had enough vetting."
About the Online Sales Tax Provision
Rep. Noem made an aggressive push to add the online sales tax legislation to the bill last minute. As The Hill explains:
Supporters of the legislation argue that it will allow states to collect money already owed to them and put online retailers on the same playing field as brick-and-mortar stores. They also argue that there's urgency for Congress to act now, before the Supreme Court acts on a case on the topic this year.
California Attacks Border Wall- Maybe?
The Federal Government’s proposed border wall with Mexico has been getting a lot of attention lately, particularly since the president recently visited the Golden State. One California legislator has an interesting take on the ongoing disagreement between California and the White House. Assemblyman Phil Ting, of CA, recently announced his bill, A.B. 2355, as a way to incentivize companies not to participate in the building of the wall.
Wayfair v. South Dakota: What Are The Possible Outcomes of the Online Sales Tax Case?
Earlier this year we shared the U.S. Supreme Court would hear a case related to online sales tax: Wayfair v. South Dakota. This ruling could settle how online purchases are taxed, potentially overturning the 1992 Quill Corp v. North Dakota ruling currently preventing states from collecting sales tax from sellers without a physical presence (or nexus) in the state.
Why is it worth it for the Supreme Court to consider this case rather than fall back on the previous Quill ruling? The world has changed a lot since 1992. As The Wall Street Journal reports, "In 1992, the justices 'did not and could not anticipate the development of modern e-commerce,' Solicitor General Noel Francisco wrote in a friend-of the-court brief."
According to The Hill, "The Trump administration, several members of Congress, state governments and major retail groups want the Supreme Court to uphold a South Dakota sales tax law. They say states should be able to require the collection of sales taxes from businesses with a significant economic presence in their jurisdictions. Other lawmakers, conservative groups and e-commerce groups warn that a ruling in favor of South Dakota would wrongly chip away at limits on state power."
Oral arguments for the case are scheduled for April 17, but in the meantime we thought it would be interesting to take a look at how the possible outcomes could affect businesses.Read more
FOCUS ON IOWA
This month we travel to the Midwestern state of Iowa, the Hawkeye State. Sitting between the Missouri and Mississippi Rivers, the state is known for its rolling plains and cornfields.
Iowa has a humid continental climate throughout the state with extremes of both heat and cold. The average annual temperature at Des Moines is 50 degrees Fahrenheit. Winters are often harsh and snowfall is common. Iowa summers are known for heat and humidity, with daytime temperatures reaching 90 degrees.
Online Sales Tax: What Should You Know? The Latest From RI
As you know, the online sales tax debate continues across the country as states look for ways to collect fees from internet shoppers to increase their revenue. Rhode Island’s reporting law similar to Colorado’s, which makes customers responsible for paying the taxes, is now in effect.
About Rhode Island’s Online Sales Tax Law
Non-collecting retailers making in excess of $100,000 in sales or more than 200 sales (number of transactions) within the immediately preceding calendar year, are responsible for registering, collecting and remitting sales tax, or must do all of the following:
- Post a website notice that lets in-state customers know their sales tax or use tax is due on certain purchases made from them, and that the state requires the customer to file a sales or use tax return.
- Notify the customer during checkout of the same information on the website notice.
- Notify the customer of the website notice, in writing, within 2 days of purchase.
- By January 31 of each year, send a written notice to all in-state customers with cumulative annual taxable purchases of $100 or more for the prior calendar year. The notification needs to include:
- The name of the retailer
- The total amount paid by the customer within the calendar year
- Date(s) of purchase(s)
- Dollar amount of each purchase
- Category or type of purchase
- Whether the purchase is exempt or not exempt from the state’s taxation code
- File an attestation with the Rhode Island Division of Taxation by February 15, stating that the above requirements were fulfilled.
Upcoming Texas Amnesty Program
There always seems to be an amnesty program going on somewhere, particularly if you know where to look.
States are aggressively pursuing delinquent taxpayers, while still making it relatively easy for them to come forward themselves. Last year, we wrote an article about some interesting amnesty programs in Connecticut (CT), Ohio (OH), and Rhode Island (RI).
Most amnesty programs allow for a waiver of penalties and a limitation on interest if businesses come forward under the terms of the program as specified by the state legislature. Most of the programs are limited in time (often only a two to three month window) and only cover certain taxes. Yet, with the right fact pattern, a company might benefit from engaging in such a program. But not always. As with most things related to multi-state tax issues, the answer may require a little more research and analysis.
