State of Wayfair: Remote Sellers Top Arkansas Tax Reform List

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

South Dakota-style sales tax collection thresholds are on the agenda in Arkansas, where a legislative task force will meet Aug. 22 and 23 to vote on a set of tax reform proposals.

Task force members ranked remote seller legislation atop a list of six potential policy proposals in a draft report of final recommendations obtained by Bloomberg Tax Aug. 20. The 16-member body is charged with finding revenue to pay for a proposed 2019 tax cut.

The state is under growing pressure to act on remote seller legislation post-Wayfair. The city of Little Rock asked Gov. Asa Hutchinson (R) to hold a special session to pass such legislation even before lawmakers return for their regular session in January 2019.

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 a South Dakota circuit court still has to bless the state’s economic nexus model before it can become effective. It’s expected to do so very soon, although the parties in the case might reach a settlement first.

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.

Pennsylvania Podcast

The Pennsylvania Institute of Certified Public Accountants released a podcast Aug. 20 about how the Wayfair decision affects financial reporting. A member of the institute also has written a blog explaining where Pennsylvania businesses stood before the decision and the direction they’re heading now, Mylin Batipps Jr., public relations coordinator of the group, told Bloomberg Tax.

Louisiana’s Objective

A “clear objective” of a recent bulletin about Wayfair from the Louisiana Department of Revenue is to “ward off” a challenge based on some other Commerce Clause principal that the U.S. Supreme Court acknowledged might invalidate South Dakota’s remote seller law,” even if physical presence is no longer required for substantial nexus, according to an Aug. 16 analysis by Baker Donelson.

The Louisiana Department of Revenue issued Remote Sellers Information Bulletin No. 18-101 Aug. 10 offering preliminary guidance on how Louisiana will incorporate the Wayfair ruling into its sales and use tax law, promising “further action on the Wayfair case … as appropriate.”

The state’s law took effect in 2016 with the same thresholds—$100,000 in sales of goods and services or 200 transactions into the state—as South Dakota, with no retroactivity.

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