Tax Reform Friday: No More Quill; States Tax How You Will


Last week’s U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. surprised many by eliminating the physical presence standard previously required for imposing sales tax collection on out-of-state retailers, stamping it “unsound and incorrect.” While the fate of South Dakota’s provision itself, S.B. 106, awaits review on remand, taxing jurisdictions across the country have made it clear that it is not too early to consider the broader implications of the court’s ruling.

Among states whose economic nexus provisions were contingent on the outcome of Wayfair, North Dakota and Vermont have already announced enforcement dates for their laws. North Dakota will begin collecting the tax the later of Oct. 1, 2018, or 60 days after a remote retailer meets the state threshold of $100,000 in sales or 200 separate transactions into the state. Vermont, whose threshold is identical to that of North Dakota (and South Dakota, for that matter), will begin collecting on July 1, 2018.

Even states that have not enacted economic nexus provisions appear to be keeping their options open. Following news of the decision, the Texas Comptroller announced that his office is considering amending their regulations to address collection obligations for remote sellers. Similarly, Nebraska hasn’t ruled out adopting an economic nexus provision. However, its governor notably stated that “[a]ny increased revenue attributable to total enforcement of our sales tax laws must be steered towards property tax relief.”

On the other hand, representatives from Oregon and New Hampshire, two states that do not impose sales taxes, have come out strongly against the ruling. Sen. Ron Wyden (D-Ore.) vowed to use his position as a ranking member of the U.S. Senate Finance Committee to “protect Oregonians … from being harmed by [the] catastrophic decision.” New Hampshire Gov. Chris Sununu stated that he would “erect every possible and constitutionally permissible legal and procedural hurdle to prevent other states from forcing [New Hampshire] businesses to collect sales and use taxes.”

Several other states have announced coming guidance on the matter. But with most legislative sessions not due to reconvene until January, it is unclear how soon the full effect of this new framework will take shape.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Do you think more states will begin adopting economic nexus provisions?

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