As state legislative sessions move into full swing, significant attention and activity has been focused on leveraging the Wayfair decision to impose sales and use tax obligations on marketplace facilitators. While states are defining marketplace facilitators differently, the measures under consideration generally apply to the operators of platforms that are used to advertise the goods and services of multiple sellers for sale and on which the operator, either directly or indirectly, provides the transmission of orders and acceptances between the buyer and seller and processes the payment for a consummated transaction.
In recent weeks, legislatures in a number of states have passed measures that are in various stages of being presented to the governor for signature, or should be acted on shortly. Measures in Nebraska (Legislative Bill 284), Utah (Senate Bill 168) and West Virginia (House Bill 2813) have received final legislative approval and at ‘press time’ were being prepared for presentation to the Governor for signature. A comprehensive bill out of New Mexico (HB 6) that has emerged from conference committee would adopt economic nexus and marketplace provisions. Kentucky House Bill 354 (as agreed to in conference committee) has passed both the House and Senate and includes provisions requiring marketplaces to collect. Virginia House Bill 1722 and Senate Bill 1083, both of which have been presented to Governor Northam, are still pending signature. Governor Northam has until March 26, 2019 to act on the bills. In addition, Kansas Senate Bill 22 contains a marketplace collection requirement, along with several provisions responding to federal tax reform. Governor Kelly has indicated she is dissatisfied with the tax reform-related provisions in Senate Bill 22, and a veto is possible. Finally, Washington Senate Bill 5581, which includes, among other things, language regarding remote seller and marketplace collection obligations, was signed by Governor Inslee on March 15, 2019. Additional details will also be provided on other marketplace legislation upon final enactment.
In a related action, the Tennessee Attorney General issued an opinion (No. 19-03) holding that an “online marketplace facilitator,” defined as the provider of a platform used by third-party sellers to solicit sales of goods and services to Tennessee customers that also accepts the customer’s purchase information and executes the sales transaction on behalf of the third-party seller, would be considered to be soliciting sales in Tennessee and would be considered a “dealer” under Tennessee’s doing business statute. The Attorney General further opined that the Department of Revenue could, by rule, require such online marketplace facilitators to collect the Tennessee sales and use tax due on sales made by out-of-state third-party sellers through the marketplace, provided that the online marketplace was not itself an out-of-state dealer, i.e., the marketplace had nexus in Tennessee under traditional nexus standards. Recall, that Tennessee is enjoined from enforcing an economic nexus standard until the Legislature approves the rule promulgated by the Department last year. The opinion, interestingly, was requested by the Majority Leader of the Tennessee House of Representatives. Please stay tuned to TWIST for future Wayfair related updates.