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:
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
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, Read More
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. Read More
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.” Read More
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: Read More
If you’ve purchased from Amazon lately, you may have noticed they’ve started charging sales tax. However, many third-party merchants that sell through the website haven’t been collecting it.
In fact, research shows that despite half of online sales happening through marketplaces (a number which is expected to grow to two-thirds within five years), these sellers don’t collect sales tax – even if the retailer they work through does (such as Amazon).
States’ Efforts: Collecting Sales Tax From Third Party Sellers
Come December 1, it’s expected the states involved in the amnesty program we’ve recently discussed will begin collecting sales tax from online merchants – including those that sell through a website like Amazon.
As the Seattle Times points out, this presents an important question: “Who will be responsible for collecting and remitting the taxes when someone buys something from a third-party seller on Amazon.com? Is that Amazon’s job or the merchant’s job, or some combination?”
The answer isn’t clear to experts or even to states themselves, as each has a different solution and approach. For example:
- Minnesota: In June the state passed legislation that requires major retailers (such as Amazon and eBay) to collect sales tax on all items sold – including those sold by third-party sellers. The law goes into effect in 2019, however it could be even sooner if the courts overturn the precedent set forth by Quill Corp v. North Dakota.
- Washington: The state passed a similar law to Minnesota, although this one goes in to effect in January 2018.
- Massachusetts: The state is forcing Amazon to turn over their marketplace sellers’ identities. They have a court order behind them, which former Amazon Senior Manager James Thomson foresees setting off, “A scramble among states bent on collecting back taxes.” He also says that if the state succeeds, “It’s going to be a bloodbath” as other states will likely follow suit.
It will be interesting to see how states continue in their efforts to collect sales tax from online sellers.
Have a question? Contact Monika Miles
Your comments are welcome!
If you’ve been following the online sales tax debate on our blog, you know South Dakota recently passed, “Senate Bill 106, allowing the state to collect taxes from sales made from online retailers – even if they don’t have nexus within South Dakota itself.”
The 2016 law mandated a sales tax collection responsibility from sellers grossing over $100,000 in sales to South Dakota customers, or transactions numbering more than 200 in a year – even if the seller has no physical presence or other connection with the state. Then NetChoice and the American Catalog Mailers Association sued the state, claiming the law violates Quill Corp. v. North Dakota, a ruling which established businesses need a physical presence in the state to be responsible for sales tax and fees. Read More
Every time we turn around, it seems there’s a new development in the online sales tax debate. As states continue to get involved and look for new ways to bolster their revenue, the issue continues to grow larger and more complex. Now Indiana is looking to the courts to settle the matter.
Indiana’s Online Sales Tax Lawsuit Read More
As you know, we’ve been following the online sales tax debate for years. From the Marketplace Fairness Act to states taking matters into their own hands, it’s been interesting to follow as lawmakers debate how to handle imposing state sales tax on internet retailers. It’s especially difficult given the wide variety of taxes and fees that would need to be imposed at a state, county and city level. Read More
What do cookies, nexus and online sales tax have to do with each other? States are continuing to look for ways to justify charging sales tax to internet retailers; Ohio just took a page out of Massachusetts’ book.
Massachusetts’ Online Sales Tax Directive 17-1
A couple of weeks ago we shared that Massachusetts created a directive that redefined nexus to include internet cookies, Read More
A couple of weeks ago we summarized Massachusetts’ Directive 17-1, a new piece of online sales tax legislation that redefined physical presence to include downloaded apps and internet ‘cookies’ – the data websites store on users’ computers and phones to track visits. While Directive 17-2, which repealed the prior directive, was announced at the end of June, the original law redefining physical presence (or nexus) was so distinctive that we wanted to take a closer look at the rule. Read More