Wayfair Now Collecting Sales Taxes in Pennsylvania

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By Leslie A. Pappas

Wayfair Inc. has agreed to collect and remit a 6 percent sales tax from shoppers who live in Pennsylvania.

The arrangement with the nation’s 16th-largest online retailer could yield millions for Pennsylvania in the future, the DOR said May 24.

“Agreements with online retailers to collect the state sales tax help to level the playing field across the retail industry and will provide additional revenue as the commonwealth works to address a $3 billion budget deficit,” acting revenue secretary C. Daniel Hassell said in a written statement.

The announcement comes as states across the country are increasing their efforts to collect more tax revenue from out-of-state online retailers. The nation’s largest online retailer, Seattle-based Amazon.com Inc., already has agreed to collect and remit sales and use taxes in every state that imposes them.

Wayfair confirmed the agreement in an email to Bloomberg BNA and said it had no further comment.

‘Quill’ Fight

The Boston-based online home goods giant has 8.9 million active customers and pulled in $940 million in direct retail revenue during the first quarter of 2017, according to company reports.

Wayfair charges sales tax on orders shipped to Alabama, California, Georgia, Illinois, Kentucky, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Texas, Utah, and any Canadian province, according to the company’s website.

Under the nexus standard established by the U.S. Supreme Court in 1992 in Quill Corp v. North Dakota, states can’t require remote sellers to collect and remit taxes if the vendor has no physical presence in the state. Several states—such as Alabama, Indiana, South Dakota, Tennessee, and Wyoming—are now challenging that rule by enacting “economic nexus” regulations or statutes that require remote retailers to remit sales taxes if they satisfy a specified threshold of in-state sales.

Wayfair is among several online retailers, including Overstock.com Inc. and Newegg Inc., fighting South Dakota’s sales tax law in pending litigation before the state supreme court.

Leading Program

The Pennsylvania DOR is in negotiations with several other online retailers, spokesman Kevin Hensil told Bloomberg BNA in an email.

“The department has had some success in improving compliance by online retailers, within the limits of federal law. We released comprehensive guidelines for retailers in 2011 and we continue to bring online businesses into compliance,” he added.

The Pennsylvania House recently passed a measure that would require remote vendors making sales in Pennsylvania to notify the shopper that sales tax is due on the purchase. Last year, the department also announced it had reached an agreement with home-sharing platform Airbnb to collect the state’s hotel occupancy tax.

“The shift to online shopping and sales has created a challenge for states across the county,” Hensil said. “The department is proud to have one of the leading programs to identify online retailers to determine if they meet the legal requirement to collect sales tax in Pennsylvania.”

To contact the reporter on this story: Leslie A. Pappas in Philadelphia at LPappas@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

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