State of Wayfair: New Jersey Joins Others in Pegging Oct. 1

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Tripp Baltz

Remote vendors are required to register by Aug. 31 and to begin collecting and remitting Mississippi’s sales tax Sept. 1, guidance from the state said.

And Mississippi Municipal League, an advocacy organization for the Magnolia State’s cities and towns, has a plan for what to do with the new revenue.

The league is calling on the state to send 18.5 percent of the money back to cities and towns on a per capita basis to be used to shore up water, sewer, and street infrastructure, according to an advocacy tool kit from the league.

In 2017, Mississippi collected more than $318 million in use tax, a number that is expected to grow by $50 to $75 million over the next two years after the U.S. Supreme Court’s ruling in Wayfair, according to the league. Remote sellers with annual Mississippi sales in excess of $250,000 are covered by the state’s economic nexus law.

The June 21 Wayfair ruling—which tossed out Quill Corp. v. North Dakota, the Supreme Court’s 1992 physical presence threshold for when states could tax remote sales—has many states looking to expand their authority over online sales taxation. The majority in the 5-4 ruling suggested strongly that South Dakota’s law would pass constitutional muster; the statute imposes a tax collection threshold at 200 transactions or $100,000 in in-state sales.

The court stopped short of formally declaring South Dakota’s law valid in the absence of Quill, and the South Dakota Circuit Court still has to bless the state’s economic nexus model—something it is expected to do very soon. In the wake of the groundbreaking decision, dozens of states that haven’t already done so are mulling whether to copy South Dakota’s law.

Here’s Another Oct. 1 State: New Jersey

Add New Jersey to the growing list of states with an Oct. 1 start date for economic nexus.

Remote sellers with more than $100,000 in gross revenue from sales into New Jersey or with 200 or more transactions into the state must register with the state and begin collecting and remitting sales tax on that date, the New Jersey Department of Treasury said in new guidance.

The division issued the guidance “because we believe the South Dakota facts are a reasonable basis for establishing a program for pursuing remote sellers, as discussed by the Supreme Court in the rendering of its decision,” Jennifer Sciortino, spokeswoman for the Office of the Treasurer, told Bloomberg Tax in an email Aug. 15.

The guidance makes it clear the department’s Division of Taxation will apply the Supreme Court’s ruling in Wayfair on a prospective basis only for remote sellers that don’t have a physical presence in the state. Remote sellers below the threshold may voluntarily register and begin collecting and remitting, the notice said.

Wyoming Proceeding Lightly

While other states are pegging start dates, Wyoming is treading a bit more lightly.

In a recent bulletin, the state Department of Revenue said it will post information on its web site “once we have a date certain when Wyoming will enforce remote sellers to license and collect sales tax.”

Other than that, the state is ready to go. In 2017, it passed an economic nexus statute just like South Dakota’s, then sued major out-of-state vendors—including Wayfair Inc., Newegg Inc. and Inc.—when the law took effect and the companies took no steps to comply. The case was put on hold pending a decision in the South Dakota case, and a court has yet to act on it since the Wayfair ruling.

Dan Noble, director of the department, has told Bloomberg Tax the state is hoping to begin implementing its economic nexus law Oct. 1, but the court case must be resolved first.

Maryland E.R.

That’s “Emergency Regulations.”

The Maryland Comptroller’s Office is waiting to hear back from the state General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review on its request for emergency regulations to impose collect-and-remit requirements on remote sellers beginning Oct. 1.

After the committee’s 10-day review, the regulations will either go into effect or get kicked back into the normal regulatory process. Since emergency rules rarely get approved, the office also submitted them through the regular process, which involves a 90-day review period followed by a 30-day public input period, Joseph Shapiro, office spokesman, told Bloomberg Tax.

Vendors with more than $100,000 in sales or 200 transactions into Maryland will be required to collect and remit once the rules take effect.

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