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
Does your manufacturing equipment qualify for the CA partial exemption? Read this article to find out more.
Remember when the California Manufacturing Sales Tax Exemption first came into fruition, on July 1, 2014? It seems like so long ago. But maybe it’s a good time to remind companies about this useful partial exemption available to manufacturing companies.
What exactly is this exemption?
It allows certain manufacturers and biotech companies to exempt a portion of California sales and use tax on purchases of qualified equipment used in manufacturing and R&D (research and development).
This exemption went into effect July 1, 2014 and applies to any sale, purchase, and lease of qualified tangible personal property on or after this date. The exemption was formerly set to sunset on July 1, 2022. However, the Governor of California recently signed Assembly Bill (A.B.) 398, which extends the exemption for manufacturing and research and development equipment to July 1, 2030. The bill has also expanded the exemption to include additional companies (see below).
An update on the new amnesty program.
Last month, we updated our readers on an ongoing amnesty program for state taxes that is currently taking effect. As this program could be helpful to sellers utilizing fulfillment marketplaces, we wanted to provide an update on this program so qualified companies can take advantage of the potential benefits of the amnesty.
What exactly is it?
Despite certain online sellers, like Amazon, volunteering to collect tax across the U.S., many online sellers are not collecting tax in states where they may have (intentionally or inadvertently) created nexus. Amnesty programs encourage companies to become compliant in a given state. This one is a grand-scale amnesty, covering many states.
The nexus committee of the Multistate Tax Commission (MTC) approved the MTC to participate in a multistate sales tax amnesty program for third-party sellers whose only nexus with a state is the use of fulfillment services offered by third-party marketplaces. The Multistate Voluntary Disclosure Program (MVDP) provides a way for a taxpayer with a potential tax liability in multiple states, to negotiate a settlement, using a uniform procedure.
Have you heard the latest online sales tax news coming out of Indiana?
Every time we turn around, it seems there’s a new development in the online sales tax debate. As states continue to get involved and look for new ways to bolster their revenue, the issue continues to grow larger and more complex. Now Indiana is looking to the courts to settle the matter.
Indiana’s Online Sales Tax Lawsuit
On August 29, IndyStar reported that Indiana’s Attorney General filed a lawsuit asking Marion Superior Court (in Indianapolis) to find the state’s online sales tax law constitutional. ” The law, which went into effect July 1, requires out-of-state businesses to collect and remit the same sales taxes as Indiana-based businesses.”
This isn’t the first lawsuit Indiana’s online sales tax law, House Enrolled Act 1129, has been involved in. American Catalog Mailers Association and NetChoice argued the legislation was unconstitutional back in June. Continue reading
A lighthouse in Portland, Maine.
This month we travel all the way to the northeast corner of the country to the state with the rocky coastline and maritime history of Maine, the Pine Tree State.
Maine is the northeasternmost state in the contiguous United States. It is known for its jagged rocky coastline, low, rolling mountains, heavily forested interior, picturesque waterways, and its seafood cuisine, especially clams and lobster.
During the last ice age, the receding glacier left artifacts that we find interesting today- millennia later. Much of Maine’s geomorphology was created by extended glacial activity at the end of the last ice age. Prominent glacial features include Somes sound and Bubble Rock, both part of Acadia National Park on Mount Desert Island. Carved by glaciers, Somes sound is considered to be the only fjord on the eastern seaboard and reaches depths of 175 feet. The extreme depth and deep drop-off allow large ships to navigate almost the entire length of the sound. These features also have made it attractive for boat builders, such as the prestigious Hinkley Yachts.
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
Did you hear about Washington’s latest state tax legislation? This post has the details.
Over the last few years, Washington has taken an interesting approach to its nexus and state tax law. Back in 2015, it adopted a click-through statute and economic nexus thresholds for businesses making sales in the state. Washington currently has a few other interesting bills up for debate, but in the meantime the Department of Revenue (DOR) enacted another piece of legislation that affects economic nexus.
About Washington State Tax Law HB 2163
Washington’s DOR explains how this new state law affects nexus and business and occupation (B&O) tax alongside a few examples on its website. Here’s a brief summary. Continue reading
Could an Amnesty Program erase your tax burden?
There is a new scheduled amnesty program that may help businesses correct overlooked tax obligations if they have been selling products and services in other states. Many companies engage in multi-state sales through an intermediary, like Amazon, eBay and similar organizations called “fulfillment services.” The fulfillment centers place a seller’s inventory in warehouses in multiple states to expedite shipping, but in the process, create nexus for the seller in those states. As such, the sellers have an obligation to collect sales tax and pay income tax. Unfortunately, unpaid taxes may incur penalties and interest. Now there may be a short time window to correct these errors and avoid interest and penalties.
On Monday, July 31, the nexus committee of the Multistate Tax Commission (MTC) approved the MTC to participate in a multistate sales tax amnesty program for third-party sellers whose only nexus with a state is the use of fulfillment services offered by third-party marketplaces. The MTC is an intergovernmental state tax agency working on behalf of states and taxpayers to facilitate the equitable and efficient administration of state tax laws that apply to multistate and multinational enterprises.
Mt. Rushmore in beautiful South Dakota
This month takes us to the Mount Rushmore state of South Dakota. South Dakota is the 5th least populous state in the U.S., with a population of 865,454 people in 2016. It is also the 5th least densely populated state in the country. South Dakota is in the north-central United States, and is considered part of the Midwest by the U.S. Census Bureau. It is also part of the Great Plains region, which covers most of the western two-thirds of the state. West of the Missouri River the landscape becomes more and more rugged, consisting of rolling hills, plains, ravines, and steep flat-topped hills called buttes. In the south part of the state, east of the Black Hills, lies the Badlands of South Dakota. Erosion from the Black Hills, marine skeletons that fell to the bottom of a large shallow sea that once covered the area, and volcanic material, all contribute to the geology of this area.
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