Multistate: More State Responses to Wayfair

States continue to issue guidance or statements since the recent U.S. Supreme Court decision in South Dakota v. Wayfair.

Podcast Transcript

On October 15, 2018, the California State Assembly held an informational meeting to discuss implementation of Wayfair in the Golden State. During the meeting, the Director of the California Department of Tax and Fee Administration (CDTFA) stated that CDTFA plans to send notices to online retailers directing them to begin collecting and remitting applicable sales and use tax by early 2019. According to the CDTFA’s spokesperson, these notices would be sent pursuant to the authority created by California’s “long-arm statute” that imposes a duty to collect use tax on retailers with substantial nexus in the state under the U.S. Constitution, which, after Wayfair, no longer requires physical presence. These notices will likely be issued by the end of 2018 and will set forth an as yet to be determined economic nexus threshold. Nexus thresholds will be discussed at the next informational meeting, scheduled for October 24, 2018. The CDTFA and legislature will discuss whether to adopt sales and transaction thresholds similar to the South Dakota law or whether higher thresholds are needed because “California has a larger population and a more complicated sales tax regime than South Dakota.”

The Texas Comptroller’s Office plans to ask state legislators to consider legislation that would allow remote sellers to elect to collect and remit a single statewide 1.75 percent local tax, rather than collecting individual local use taxes at various local rates. The 1.75 percent rate is the weighted average of all local Texas sales and use tax rates. Texas currently has more than 1,000 local jurisdictions that impose local sales and use tax rates at varying rates. Under the proposal, purchasers would be able to apply for a refund through the Comptroller’s office if a jurisdiction's local use tax rate is less than 1.75 percent. The draft legislation is currently being reviewed by the Comptroller’s taxpayer advisory and business advisory groups and may change. The Comptroller’s office also published a proposed revision to Rule 3.286 to reflect the Supreme Court’s decision in Wayfair. The regulation addresses the sales and use tax responsibilities of sellers and purchasers, including nexus, permits, returns and reporting.  Notably, under the proposed rule a remote seller with no physical presence in the state would not be required to collect and remit tax if the remote seller’s total Texas revenue in the preceding 12 calendar months was less than $500,000.  Comments on the proposed regulation will be accepted by the Comptroller’s office for 30 days after the October 19 publication date.

On October 15, 2018, the Oklahoma Tax Commission announced that remote sellers can now register for a simplified sale tax reporting account through the Commission website. Remote sellers who are required to collect and remit sales and use tax to multiple states also have the option to register through the Streamlined Sales Tax Registration system. The simplified registration system reduces the amount of information required to obtain a registration certificate but does not provide any change in the requirement that a remote seller that elects to collect and remit tax must collect the combined state and local sales and use tax rate in the jurisdiction to which it ships goods. Recall, that effective July 1, 2018, a seller with no physical presence in the state that makes more than $10,000 in sales into Oklahoma on an annual basis must elect to either collect state and local sales and use tax on sales in to the state or adhere to various requirements for providing and filing reports on purchases by customers.

Please stay tuned to TWIST for more Wayfair-related developments.

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