Multistate: Additional state guidance on South Dakota v. Wayfair, Inc.

In the days following the U.S. Supreme Court’s overruling the Quill physical presence standard, a number of states have issued statements or guidance on the decision.

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In the days following the U.S. Supreme Court’s overruling the Quill physical presence standard, a number of states have issued statements or guidance on the decision. The Iowa Department of Revenue issued a statement simply confirming that the state’s recently enacted economic provisions, which are essentially the same as South Dakota’s, become effective January 1, 2019. The Department noted that “the Wayfair ruling does not change the effective date of Senate File 2417 and the Iowa Department of Revenue will not seek to impose sales tax liability for periods prior to January 1, 2019 for retailers whose only obligation to collect Iowa sales tax comes from these new laws.” The Department encourages taxpayers who should have collected Iowa sales tax because they met the physical presence standard under Quill to participate in Iowa’s voluntary disclosure program.

The Massachusetts Department of Revenue issued a statement that the Department’s existing regulation, as applicable to vendors making sales via the Internet, “continues to apply and is not impacted by the Supreme Court's decision.” Under the regulation, remote sellers that (1) have the requisite “in-state physical presence,” which is generally defined with references to having apps and cookies in the state or having relationships with in-state content distribution networks, and (2) that meet a specific sales threshold of more than $500,000 in Massachusetts sales from transactions completed over the Internet and delivery into Massachusetts of 100 or more transactions, are required to collect and remit Massachusetts sales and use tax.

On June 21, 2018, the Mississippi Department of Revenue issued a statement noting that all remote sellers meeting the state’s already adopted economic nexus thresholds of making more than $250,000 in sales for the prior 12-month period in Mississippi, are now required to register to collect and sales tax.

The Vermont Department of Taxes issued a statement explaining that remote sellers, meeting the state’s economic nexus thresholds of sales of at least $100,000 or 200 individual transactions during any preceding twelve -month period, are required to register to collect and remit sales tax beginning July 1, 2018.

The Texas Comptroller weighed in on June 27, 2018, noting that “under its existing legal authority, the Comptroller's office has started reviewing rules that may need updating.” The Comptroller stressed, however, that this would not include any retroactive application of the new law to remote sellers that have no physical presence in Texas. The Comptroller then said he “expects the Texas Legislature to play an important role in addressing key issues when they return in January 2019.”

Finally, on June 27, 2018, the Hawaii Department of Taxation announced how it plans to implement the state’s recently enacted general excise tax (GET) economic nexus provisions. This law takes effect on July 1, 2018 and applies to “taxable years beginning after December 31, 2017.”  The Department announced that it will enforce the provision staring January 1, 2018, but will allow “qualifying taxpayers” to pay GET due from January to June 2018 without penalty or interest. The announcement provides details on how “qualifying taxpayers” can pay tax on “catchup income.”

Please stay tuned to TWIST for additional Wayfair updates.

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