State of Wayfair: Online Sellers, Prep for Tax Changes in South

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

Louisiana’s Sales and Use Tax Commission for Remote Sellers will meet Aug. 9. Don’t expect any surprises, Revenue Secretary Kimberly Robinson told Bloomberg Tax.

Robinson anticipates a simplified tax collection regime that would be able to pass constitutional muster in the event of a challenge, when the commission issues its final guidance on remote sales post-Wayfair.

The groundbreaking June 21 South Dakota v. 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 Supreme Court still has to bless the state’s economic nexus model before it can become effective. It’s expected to do so in mid-August, if the parties in the case don’t settle before then.

In the wake of the decision, dozens of states that haven’t already done so are mulling whether to copy South Dakota’s law.

“We’re going to finalize our guidance on Wayfair at this meeting, discuss where we go on software” and tax collection from online marketplaces like Inc., eBay Inc., and, Etsy Inc., Robinson said. “It’s going to be very vanilla. There’s not going to be any front page news.”

Louisiana also still aims to start collecting online sales taxes from vendors starting Jan. 1, 2019. “It’s an aggressive and optimistic date but I think we can get there,” Robinson added.

Big Ask From Little Rock

“As quickly as possible,” Gov. Asa Hutchinson (R) should call a special session to pass a remote sales tax collection bill, the Little Rock Board of Directors said in a resolution passed unanimously Aug. 7.

City Attorney Tom Carpenter told Bloomberg Tax in a text message after the vote that the resolution shows the state’s largest city is “serious in its desire to get this issue resolved.” Remote sales tax collection will be good for Little Rock, bringing in an estimated $1 million to $1.6 million. But the real benefit will go to smaller communities in Arkansas, he said.

J.R. Davis, Hutchinson’s communications director, told Bloomberg Tax hours before the board vote that “at this time, there is no plan to hold any sort of special session for any legislation.”

North Carolina Targets November

Nov. 1 will be the start date for required remote sales tax collection in North Carolina, the state’s Department Revenue said in an Aug. 8 directive.

The Wayfair ruling clears the way for North Carolina to enforce an existing state law requiring remote sellers to collect and remit taxes (N.C. Gen. Stat. Section 105-164.8(b)). The North Carolina law is broader than the South Dakota law at the center of the ruling, William W. Nelson, a partner with Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan LLP in Raleigh, told Bloomberg Tax.

Nelson said the directive seems to be saying the state will attempt to enforce North Carolina’s law administratively “within what it believes to be the contours of the Wayfair decision,” rather than wait for action from the state Legislature.

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