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By Tripp Baltz
Wyoming Gov. Matt Mead (R) signed a bill requiring certain out-of-state retailers to collect and remit sales and use taxes on remote sales.
Mead signed the measure ( H.B. 19) March 1, establishing economic nexus for large remote vendors that don’t currently gather and pay taxes on internet and other remote transactions. Under the bill, out-of-state vendors with more than $100,000 in aggregate annual sales to customers in Wyoming will be required to remit sales and use taxes. The requirement also will apply to sellers with more than 200 transactions involving Wyoming consumers.
The legislation is fashioned after an act approved in 2016 in South Dakota that is now at the center of litigation involving a handful of large online retailers. The bill challenges the foundational physical presence standard affirmed by the U.S. Supreme Court in Quill v. North Dakota (1992). The Quill decision said a state may not require a remote seller to collect and remit taxes if the vendor lacks a physical presence in the state.
Wyoming estimates it is missing out on $30 million to $50 million in taxes due to the state taxes that aren’t collected and paid, according to House Revenue Committee testimony on the bill. The bill’s fiscal note estimates the total increase in sales tax revenue in Wyoming, both the state and local share, at about $28 million a year. The statewide sales tax rate is 4 percent, with local option taxes on top of that.
However, until the courts rule on the issue, the amount of additional revenue collected is indeterminable, the note said.
Sen. R. Ray Peterson (R), chair of the Senate Revenue Committee, told Bloomberg BNA March 3 that he didn’t know if Wyoming would get sued because of the passage of the act. It’s possible that online retailers might wait to see what happens in the courts with the South Dakota act first, he said.
Peterson said he was “excited” the bill passed. “It was something we needed to do,” he said. As a member of the Streamlined Sales Tax Project, Wyoming has “been pushing towards this for years.”
“This reinforces the idea that businesses outside the state should pay these taxes just like local businesses do,” he said. “And it’s not just a matter of fairness in the business community; it’s also unfair to consumers who shop at brick-and-mortar places to have to pay the tax when consumers online don’t.”
The same day Mead signed the bill, online retail giant Amazon.com Inc. began voluntarily collecting and remitting the state’s sales and use tax on transactions. The bill provides for the Wyoming Department of Revenue to sue companies that don’t remit taxes.
David Bush, a spokesman for Mead, told Bloomberg BNA March 3 that the governor noted in his 2017 State of the State address that he supports the concept of taxation of remote sellers.
The legislation takes effect July 1.
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Text of H.B. 19 is at http://src.bna.com/mHz.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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