In anticipation of the Supreme Court’s ruling in South Dakota v. Wayfair, Inc., many states rushed to enact economic nexus laws similar or identical to South Dakota’s. Although the Supreme Court did not directly rule that South Dakota’s law was constitutional, it did approvingly cite the elements of their statute. Other states have taken this as a green light to begin enforcing these economic nexus rules. But this momentum has left another group of states taking a different tack: states with no sales tax.
New Hampshire, Delaware, Montana, Oregon, and Alaska do not impose a sales tax on the sale of tangible personal property. Until the Supreme Court’s ruling in Wayfair, a retailer in one of those states could have relied on the physical presence requirement of Quill and National Bellas Hess to avoid having to collect and remit any sales or use tax so long as they kept their presence within a no-tax state. Now that states are charging ahead with their economic nexus provisions, retailers in no-tax states might see the end of what Justice Kennedy called a “judicially created tax shelter.”
New Hampshire has taken the lead in its opposition to the Wayfair decision and its implication for New Hampshire-based retailers, as reported by Bloomberg Tax’s Aaron Nicodemus. Gov. Chris Sununu (R) has stated that he will seek to “erect every possible and constitutionally permissible legal and procedural hurdle.” To achieve this end, the legislature has been called back into session to consider a bill, and a draft has been released. The bill would force other states seeking to impose collection requirements or seeking information from New Hampshire-based retailers to first seek approval from the state attorney general. The foreign state would first file a registration and pay fee at least 90 days before proceeding against a retailer. New Hampshire would then review the registering state’s law to determine whether it complies with the U.S. Constitution and state law, using the elements of South Dakota’s law as a guide.
On the federal side, senators from several no-tax states have proposed the Stop Taxing Our Potential Act (STOP Act) which would overturn Wayfair and limit sales tax collection requirements to those with physical presence in a taxing state. The STOP Act would also define physical presence to exclude click-through nexus, and would exclude marketplace providers and referrers from the definition of “sellers”; reporting requirements would be prohibited without this physical presence.
In addition, Rep. Bob Goodlatte (R-Va.) has scheduled a hearing on taxing remote sales for the House Judiciary Committee as early as next week, as reported in the Daily Tax Report: State.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Do you think Congress will act to overturn Wayfair?
Review the biggest developments in state tax for the first half of 2018 with Bloomberg Tax’s State Legislative Sessions Review Webinar on Wed., July 25, 2018. To register, click here.
Get a free trial to Bloomberg Tax: State, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)