State of ‘Wayfair': Rhode Island Serious About Retroactivity

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By Tripp Baltz

Retroactivity—the idea that states could compel remote vendors to remit sales and use taxes on transactions that occurred before the U.S. Supreme Court’s groundbreaking Wayfair ruling—seems to be giving online sellers the most amount of heartburn.

Rhode Island isn’t providing any comfort on the question, for now. The state’s current position is that it’s possible vendors could be liable to remit taxes that weren’t collected, but were owed, on internet and other remote sales prior to the court’s decision in South Dakota v. Wayfair, Paul Grimaldi, spokesman for the state Department of Revenue’s Division of Taxation, told Bloomberg Tax July 12.

The good news for concerned vendors is that the liability would only go back to Aug. 17, 2017, when Rhode Island passed a law requiring noncollecting retailers to register for a license to collect and remit taxes or, if they choose, meet certain notice requirements about online sales.

“We’re not reaching back 10 years for something that someone bought on Amazon,” he said.

The 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. 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.

Lone Star Questions

Perceived ambiguities in the ruling has Texas—and many other states—scratching their heads.

“The court did not determine exactly what constitutes undue burdens” for sellers, Kevin Lyons, spokesman for the Texas Comptroller of Public Accounts, told Bloomberg Tax July 11. The office is suggesting the Legislature, which meets next year, amend the state’s tax code to help address the legal requirement so that the state doesn’t put an undue burden on remote sellers, he said.


Louisiana would like “something resembling simplified collection,” but not necessarily membership in the Streamlined Sales and Use Tax Agreement, the state’s top revenue official told Bloomberg Tax.

“I would say we would be more leaning towards doing our own thing,” Louisiana Department of Revenue Secretary Kimberly Robinson said.

The state’s Sales and Use Tax Commission for Remote Sellers will meet Aug. 9 to hammer out guidance details and discuss software options for vendors to collect taxes on remote sales, she said. The state is targeting Jan. 1 as the collection start date.


California, another non-Streamlined state, is also carefully considering its next steps. Lack of membership in the agreement might complicate the state’s path, officials said.

Carley Roberts, an attorney with Pillsbury Winthrop Shaw Pittman LLP in Sacramento, wondered if the state were to adopt its own simplified structure without belonging to the SSUTA, would that result in imposing an undue burden on sellers?

Montana in Middle

Lawmakers in New Hampshire, one of five states without a statewide sales tax, will go into special session in July to consider bills aimed at shielding state citizens and businesses from the impact of Wayfair.

Montana, another non-sales-tax state, has no such plans.

Gene Walborn, director of the Montana Department of Revenue, told Bloomberg Tax July 12 he hasn’t picked up any chatter from legislators that they are interested in bills to reduce Wayfair effects in the Treasure State.

“We’re concerned about the impact on small business, but we’re not sure what the answer is,” he said. “It wouldn’t surprise me if it was discussed during the session in January.” The Montana Legislature, which meets every other year, convenes in 2019.

New Hampshire Goes Opposite Way

New Hampshire preferred the Quill physical presence standard that the high court tossed out with Wayfair. To resist the ruling, the state is considering turning the tables on what Gov. Chris Sununu (R) calls “foreign jurisdictions"—tax entities in other states.

One of the maneuvers New Hampshire is mulling would be to bar out-of-state taxing entities from imposing sales and use tax collection obligations on online sellers in New Hampshire unless they give notice to the New Hampshire Attorney General.

With assistance from Karn Dhingra in Houston; Laura Mahoney in Sacramento, Calif.; Aaron Nicodemus in Boston; and Paul Stinson in Austin, Texas

To contact the reporter on this story: Tripp Baltz in Denver at

To contact the editor responsible for this story: Ryan C. Tuck at

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