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 Ryan Prete
Some parties aren’t giving up on congressional action on online sales taxation.
The American Catalog Mailers Association (ACMA), in a letter to congressional leadership, urged lawmakers to introduce and enact legislation before the end of the year “that allows small businesses to fully and accurately comply” with the U.S. Supreme Court’s decision in South Dakota v. Wayfair.
The Oct. 23 letter asks that the legislation establish a “realistic and orderly” phase-in date of April 1, 2019, and prohibit retroactive enforcement.
Since the Wayfair ruling, three federal proposals concerning online sales tax have been introduced in Congress. All three have aimed to either curb or reverse the high court’s ruling:
None of the bills has received congressional consideration.
The U.S. Supreme Court’s June 21 South Dakota v. Wayfair ruling canned Quill Corp. v. North Dakota, the Supreme Court’s 1992 physical presence threshold for when states could tax remote sales. The majority in the 5-4 ruling suggested strongly that South Dakota’s law requiring remote sellers to collect sales tax if they had more than $100,000 in in-state sales or 200 transactions would pass constitutional muster.
Since the Wayfair ruling, dozens of states have passed versions of South Dakota’s law or are enforcing existing nexus laws and rules they already have on the books. Many states are also rushing to impose duties on marketplace facilitators such as Amazon.com Inc., eBay Inc., and Etsy Inc. that host sellers on their sales platforms. Such laws or regulations require facilitators to collect and remit taxes on behalf of their third-party sellers.
Avalara Inc. is facing a federal patent infringement complaint from PTP OneClick LLC.
Avalara is one of the largest providers of sales and use tax software. The company held an initial public offering on June 15, just six days before the high court’s Wayfair ruling.
PTP OneClick LLC filed the complaint Oct. 22 with the U.S. District Court for the Eastern District of Wisconsin, Green Bay Division. In it, owner Pavlos Pavlou asked the court to permanently prohibit Avalara from “commercially manufacturing, using, offering to sell, or selling the Avalara Products” in the U.S. as long as Pavlou’s patent is valid.
According to the complaint, Pavlou met with Avalara executives in 2011 to discuss a potential business partnership. At that time, “Avalara’s products did not allow a user to accurately or comprehensively calculate multi-level local sales and use tax or prepare or file returns for the same.”
Avalara didn’t immediately respond to requests for comment.
As Wayfair implementation rolls forward, states are taking care to avoid creating new burdens with respect to collection and remittance of sales tax.
A case in point are marketplace statutes that are moving forward in many states. In most cases, such laws make it clear that marketplace platforms like Amazon.com Inc., Etsy Inc., and eBay Inc. are responsible for collecting and remitting taxes on remote sales by third-party sellers offering goods and services on those platforms when economic nexus thresholds are met.
Smaller sellers remain liable for collecting and remitting tax on sales conducted on their own websites under economic nexus statutes. For many such sellers, the most sales are conducted on the major marketplace websites; their own “mom-and-pop” sales are a tiny fraction of overall sales.
One question that has arisen is the extent to which marketplace facilitators—which includes the major online marketplace platforms when they market and process payment and delivery of a product—must provide sales and transaction information to third-party vendors. This question was kicked around during an Oct. 24 meeting of the Multistate Tax Commission’s Wayfair Implementation and Marketplace Facilitator Work Group.
Richard Cram, director of the MTC’s National Nexus Program, surveyed work group members about the information obligation of marketplaces. A majority of those who responded said they opposed language requiring marketplaces to provide third-party sellers with that information, saying it would place an unnecessary burden on marketplaces.
“Surely, a third-party seller can determine this without imposing unnecessary reporting burdens on marketplaces,” Rob Plattner, an attorney for Amazon, said in a written response provided to the work group. “More than that, a third-party seller can easily determine from its books and records on which platforms it made all of its sales.”
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)