South Dakota’s online sales tax legislation could end up before the U.S. Supreme Court. Here are the details.
If you’ve been following the online sales tax debate on our blog, you know South Dakota recently passed, “Senate Bill 106, allowing the state to collect taxes from sales made from online retailers – even if they don’t have nexus within South Dakota itself.”
The 2016 law mandated a sales tax collection responsibility from sellers grossing over $100,000 in sales to South Dakota customers, or transactions numbering more than 200 in a year – even if the seller has no physical presence or other connection with the state. Then NetChoice and the American Catalog Mailers Association sued the state, claiming the law violates Quill Corp. v. North Dakota, a ruling which established businesses need a physical presence in the state to be responsible for sales tax and fees.
Online Sales Tax Bill Ruled Unconstitutional
Unsurprisingly, South Dakota’s Supreme Court ruled Senate Bill 106 to be unconstitutional. Supreme Court Justice Glenn Severson stated, “We see no distinction between the collection obligations invalidated in Quill and those imposed by Senate Bill 106…and hold that the circuit court correctly applied the law when it granted sellers’ motion for summary judgment.” Continue reading
What’s the latest in the online sales tax debate? The No Regulation Without Representation Act. Read about it here.
As you know, we’ve been following the online sales tax debate for years. From the Marketplace Fairness Act to states taking matters into their own hands, it’s been interesting to follow as lawmakers debate how to handle imposing state sales tax on internet retailers. It’s especially difficult given the wide variety of taxes and fees that would need to be imposed at a state, county and city level.
New Online Sales Tax Bill: No Regulation Without Representation
The latest legislation coming from Washington DC is called the No Regulation Without Representation Act. Unlike previous bills, this one would actually remove the ability for states to collect online sales tax by essentially codifying the physical presence standard set in the US Supreme Court case Quill Corp v. North Dakota (1992). What would that mean for taxpayers? It would define physical presence (and that you have to have it in order for a state to impose its taxing scheme), as Quill did, and also likely create a de minimis threshold. The bill would essentially eliminate click through nexus standards and affiliate nexus rules currently being imposed by various states. Continue reading
Is Ohio’s new approach to online sales tax justified?
What do cookies, nexus and online sales tax have to do with each other? States are continuing to look for ways to justify charging sales tax to internet retailers; Ohio just took a page out of Massachusetts’ book.
Massachusetts’ Online Sales Tax Directive 17-1
A couple of weeks ago we shared that Massachusetts created a directive that redefined nexus to include internet cookies, which meant that the state was recognizing these bits of computer code as a way to establish a physical presence, therefore making internet retailers responsible for collecting and remitting sales tax from online shoppers. Continue reading
Have you been following the latest online sales tax directives from Massachusetts?
A couple of weeks ago we summarized Massachusetts’ Directive 17-1, a new piece of online sales tax legislation that redefined physical presence to include downloaded apps and internet ‘cookies’ – the data websites store on users’ computers and phones to track visits. While Directive 17-2, which repealed the prior directive, was announced at the end of June, the original law redefining physical presence (or nexus) was so distinctive that we wanted to take a closer look at the rule.
Massachusetts’ Online Sales Tax Directive 17-1
What made this state’s approach to online sales tax so uncommon? Sylvia Dion, our colleague and a principal at PrietoDion Consulting Partners, provides a nice summary in a recent blog post for SalesTaxSupport.com. I’ve included a few of her key points below, but the reason so many opposed it (including trade groups) is that it redefines nexus, twisting established precedent to justify collecting sales tax from internet vendors.
It’s worth noting that, unlike other states that have enacted online sales tax legislation, Directive 17-1 was established as an administrative policy from the Massachusetts Department of Revenue rather than the state legislature. Also, because the directive clearly targets “internet vendors,” there is a strong argument that it could be discriminatory.
The most interesting part of this directive, however, is the detailed discussion and justification accompanying it, contorting previous precedent and state law to increase the number of online retailers responsible for charging customers for state sales tax. Continue reading
How is Massachusetts approaching online sales tax? This post explains!
Over the last couple of months we’ve been taking a closer look at how various states are approaching the issue of online sales tax. Some states, like Washington and Nevada, have enacted “Amazon Laws” that make some retailers responsible for collecting and remitting state sales tax. Other states, such as Arizona, haven’t created new legislation directly about the issue yet and seem to be waiting to see how the debate is settled, either in Congress or through other states’ laws.
Today we look at a state that has been a little bit slower to enact online sales tax legislation, but is starting to make changes internet retailers need to know about: Massachusetts. Keep reading for the details. Continue reading
I just returned from an amazing vacation – a cruise of the Mediterranean. We started in Athens, Greece; spent just a couple days there enjoying the history, and then boarded our ship. The cruise took us to the Greek isles of Santorini and Crete, and then we sailed to Italy, the beautiful St. Tropez, France, and finally Barcelona, Spain. We finished our vacation by sampling many, many tapas and wines in Barcelona. About midway through our vacation, I found myself wondering – how could I do US multistate tax consulting somewhere in Europe? I’m still working on that angle, and will certainly keep you posted.
But meanwhile, on the flip side of that equation, we’ve been engaging with several foreign companies who have US operations and find our state tax laws to be, well, challenging! As I tell all my foreign clients – trust me, they are challenging for US companies too! Here are some of the main things for foreign companies to think about as they begin doing business in the US.
How does New York approach online sales tax? This blog post explains.
Overall, the topic of collecting online sales tax is not as cut and dry as some would first assume, with ambiguous meanings and regulations, often confusing business owners. And hopefully, that’s where we come in to help!
In our series we have talked about multiple states, including Nevada, Washington and Colorado, and how each one handles the issue surrounding online sales tax for their state; up next in the lineup is New York.
A Summary of New York’s Online Sales Tax Law
New York was the first state in the country to enact a law for larger internet retailers (back in 2008). This law is referred to as the “Amazon Law,” based on the large internet retailer that used to have physical presence in very few states and therefore wasn’t required to collect sales tax. Amazon has now changed its business model and has worked with many states to collect sales tax. However, over the past several years, many states enacted “Amazon Laws” or “click through” statutes to get ahead of the company and internet retailers. New York was simply the first! Continue reading
Check out this post for a look at how Nevada is approaching online sales tax!
If you’ve been following along with our series about various states’ approach to online sales tax, you can see how multi-state tax issues can get confusing for business owners quickly.
At this point we’ve taken a look at the how Colorado, Alabama, Washington, Texas and Arizona establish nexus, which determines eligibility for state sales tax; today we review Nevada.
A Summary of Nevada’s Online Sales Tax Legislation
Nevada is one of the states that enacted the “Amazon Law” back in 2015. As Nolo.com explains, this means that a couple of years ago the state extended nexus to include:
- Retailers that have an agreement with a business or seller located in Nevada to pay for customer referrals obtained via a link on the Nevada seller’s website (a click-through arrangement)
- The out-of-state retailer’s gross receipts from these directed sales to Nevada customers exceeds $10,000 during the preceding four calendar quarters
How does Arizona approach online sales tax? This blog post explains!
Have you been following our series on how states are approaching the online sales tax debate? So far we’ve taken a look at Colorado, Alabama, Washington and Texas; today we look at Arizona! Keep reading to see how the Grand Canyon State is approaching the issue.
A Summary of Arizona’s Online Sales Tax Legislation
Unlike the other states we’ve covered so far, Arizona interprets the 1992 court case, Quill Corp. v. North Dakota, a little bit more directly. The precedent set forth established that companies need to have a physical presence in the state (or nexus) in order for the state to collect sales tax on a purchase.
While many states establish economic nexus through a variety of provisions, Arizona’s 2015 Tax Handbook clearly states that physical presence as defined by Quill is key. And, as Nolo.com points out, “According to the same section, a company with no physical presence in the state, but whose products are both available in independently-owned Arizona stores and directly from the company via the internet, is not responsible for collecting sales tax.” Continue reading
How is Texas handling the online sales tax debate? This blog post explains!
Have you been following the online sales tax debate? Congress hasn’t been able to come up with a solution at this point, so states are taking matters into their own hands. This series showcases how various legislatures across the country are approaching the issue. So far we’ve covered Colorado, Alabama and Washington. This week we take a look at Texas.
A Summary of Texas’ Online Sales Tax Legislation
Although the 1992 court case, Quill Corp. v. North Dakota, set precedent that companies need to collect sales tax from customers in states where the business has a physical presence (or nexus), many states – including Texas – interpret that to mean that they can collect sales tax if your enterprise has established nexus in their state by other than just physical presence. This is often referred to as economic nexus. Continue reading