Multistate: More State Responses to Wayfair Decision

As we approach the three-month anniversary of the U.S. Supreme Court decision in South Dakota v. Wayfair, states continue to roll out guidance on how they will apply the decision.

The Commissioner of the Indiana Department of Revenue explained in a statement to the tax press that the declaratory judgment action that prevented the Department from enforcing Indiana’s economic nexus law has been resolved. Specifically, the American Catalog Mailers’ Association and Netchoice, an Internet trade group, had settled their case with the DoR and asked that the case be dismissed. Accordingly, the Department will begin enforcing its economic nexus standards against remote sellers on October 1, 2018. The Department will not enforce the law retroactively.

On August 29, 2018, the Maryland Legislature’s Joint Committee on Administrative, Executive, and Legislative Review (AELR) approved an emergency regulation that amends the definition of an out-of-state vendor to include a remote seller whose gross revenue exceeds $100,000 or has 200 or more separate transactions, in the previous or current calendar year, from the sale of tangible personal property or taxable services to in-state customers. The emergency regulation will take effect on October 1, 2018 and is effective until March 30, 2019. Presumably, at that time a permanent regulation will be promulgated.

New Jersey Governor Phil Murphy, on August 27, conditionally vetoed a bill that would have amended the definition of “seller” to include a seller who receives gross revenue of more than $100,000 or 200 or more separate transactions, from the sale of tangible personal property, specified digital products, or services into the state, within the calendar year or the prior calendar year. In the conditional veto, the Governor suggested certain clarifying changes to the bill (primarily related to obligations of marketplace operators), but noted that he agrees with the underlying law change. Both houses of the state legislature will reconsider the bill when the legislature is back in session. Despite the pending legislation, the New Jersey Division of Taxation had already announced on August 14, 2018 that effective October 1, 2018, remote sellers meeting South Dakota- style thresholds (over $100,000 of gross revenue from the sale of tangible personal property, specified digital property, or services into New Jersey or 200 or more separate transactions for delivery into New Jersey in the prior or current calendar year) must register, collect, and remit New Jersey sales tax.

The Oklahoma Tax Commission issued a Press Release noting that under existing state law, remote sellers that sold at least $10,000 worth of taxable merchandise in the state of Oklahoma during the previous 12 months are required to collect and remit the tax or to comply with statutory notice and reporting requirements. Oklahoma law also requires marketplace facilitators and referrers to file an election with the Oklahoma Tax Commission by July 1, 2018 to either collect and remit Oklahoma sales or comply with statutory notice and reporting requirements.

In South Dakota, Governor Dennis Daugaard submitted two bills for consideration in a special session starting September 12, 2018.  One of the bills revises South Dakota law to require all remote sellers exceeding the small seller exception, except the Wayfair litigants, to collect sales and use tax effective November 1, 2018. Another bill would require marketplace providers to collect and remit sales tax on sales made on behalf of marketplace sellers on the marketplace. Stay tuned to TWIST for results of the South Dakota special session and more Wayfair-related updates.