Weekly Round-Up: Sales Tax Nexus Takes Center Stage

An Illinois state court judge sided with the electronic marketing industry in its challenge to the state's so-called Amazon tax law, ruling April 25 that the law violates the Constitution and federal rules governing electronic commerce, Bloomberg BNA correspondent Michael Bologna writes in the Daily Tax Report.

In Performance Marketing Association Inc. v. Hamer, Ill. Cir. Ct., No. 2011 CH 26333 (April 25, 2012), the Cook County Circuit Court grants summary judgment to electronic marketing firms and finds that H.B. 3659 (Public Act 96-1544) violates the Commerce Clause of the Constitution and the federal Internet Tax Freedom Act (ITFA), Bologna writes. The court is expected to issue a written order comporting with the ruling in a few days, Bologna explains.

Meanwhile, federal lawmakers said at a recent Senate panel that Congressional action on interstate commerce issues such as the online sales tax are key elements of tax reform that will help state and local governments, Bloomberg BNA reporter Liz White writes in a story for the Daily Tax Report.

In Bloomberg BNA’s 2012 State Tax Department Survey, 19 states said a remote vendor that enters into affiliate agreements with one or more residents in the state would trigger nexus if sales attributable to all such arrangements totaled less than $10,000 for the year.

Twenty-one states said they would find nexus under these circumstances if annual sales attributable to the affiliate arrangements totaled $10,000 or more.

Included among these jurisdictions are several that have not enacted so-called “Amazon” or click-through nexus legislation. Among them are Arizona, the District of Columbia, Florida, Iowa, Kansas, Louisiana, Maryland, Missouri, Nevada, New Mexico, North Dakota, Pennsylvania, South Dakota, Tennessee, Washington, and West Virginia.

“Pennsylvania's recently issued guidance announcing its adoption of an affiliate nexus policy without having adopted legislation is a disconcerting approach,” said the Council On State Taxation’s Fred Nicely, “because it is not based on Pennsylvania's legislature enacting a law, but the Pennsylvania Department of Revenue promulgating a tax bulletin that relies on a general definition in Pennsylvania's sales tax law.”

For a complete look at the issues addressed in this year’s survey, check out Assistant Managing Editor Steven D. Roll’s article in this week’s issue of the Bloomberg BNA Weekly State Tax Report, which can be read in its entirety here.

Additional expert analysis of the results will be presented in a May 17 webinar by Fred Nicely, tax counsel for the Council On State Taxation (COST), and Thomas Shimkin, director of the Multistate Tax Commission's National Nexus Program.

In other developments…

Retailers praise governorfor e-fairness support.

Iowa and Kansas: remote access to software is not taxable . . . or is it, Sutherland SALT asks.

Inheritance and estate tax rates and exemptions, is the subject of the Tax Foundation’s latest Monday Map.

Tax revenues surpass previous peak but growth softens once again, according to a state revenue report issued by the Nelson A. Rockefeller Institute of Government.

Congressional Budget Office testifieson federal support for state and local governments provided through the tax code.

Compiled by Priya D. Nair
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