I have not seen any forum posts at all on this subject. In the past six years that I have been a forum member, I have derived tremendous benefits from the exchange of knowledge and information from other forum members. I'd like to share some of the knowledge that I now have that could (or will) affect all of us. That's the sole purpose for my post. Don't shoot the messenger!
In June 2018 the United States Supreme Court made a significant decision related to the collection of sales taxes from out-of-state sellers and buyers in "The State of South Dakota vs. Wayfair Incorporated".
Your opinions may be significantly different from mine.
I just completed a Continuing Professional Education (CPE) webinar today from the State of Texas Comptroller's office on the subject of franchise taxes. Their franchise tax is similar in form to a state income tax on businesses. At the conclusion of the webinar I submitted a question to the Moderator related to the state's plan for the implementation of the June 21, 2018 United States Supreme Court decision in the Wayfair case. The subject matter for this landmark case included both the standards for the levying of state sales taxes and the establishment of a "Nexus" from out-of-state sellers.
In response to the "Nexus" definition question:
What establishes nexus in a state?
Nexus, also called "sufficient physical presence", is a legal term that refers to the requirement for companies doing business in a state to collect and pay tax on sales in that state. For example, if you sell goods or services in Los Angeles, you must file and pay California state taxes.
For many years this issue has predominantly been associated with Internet sales across state lines. In a past court decision in the Quill Corporation vs. the State of North Dakota “ a physical presence" (brick and mortar facility] was required before there was a "Nexus" established and a requirement to collect state sales taxes. The Quill decision explains why many Internet sellers (i.e. Amazon and Cabelas) are now collecting state sales taxes in the location of the Buyer, at the Buyer's local rate. This situation did not occur in the past.
In June of this year in the Wayfair decision, the U. S. Supreme Court (SCOTUS) ruled that the brick and mortar presence standard in Quill was "unsound and incorrect". The Supreme Court overruled Quill and ruled in favor of the State of South Dakota, and not Wayfair Inc.
The rule for collecting sales taxes from sales to residents of South Dakota is that if you: a) have annual sales of $200,000 or more OR b) have 200 or more transactions each year you must collect, remit, and report sales taxes. As you might expect, this same standard is not the same for all states, and not all of the states have realized that they just won the "Power Ball Jackpot" for fixing their revenue and budget deficit problems. This hyperlink is a very good starting point - Update on State Responses to Wayfair - Sikich LLP My recommendation is to contact the state comptroller's office.
I'm chugging (choogling ??) along in the webinar and thinking to myself, if the states now have a license to kill for the collection of sales taxes, what about state income taxes???
Here's the response that I received this afternoon from the Texas Comptroller's office that has some excellent information, references with hyperlinks, and that also includes a Frequently Asked Questions (FAQs) section.-https://comptroller.texas.gov/taxes/sales/remote-sellers.php
I was right on target!
What does all of this mean for us????
Individual states can now, or will in the future, require that:
1. More out-of-state and Internet sellers increase the prices that we pay for the collection of our state sales taxes;
2. In the future (probably 2019 or 2020) Sellers will probably (To Be Determined) have to determine if they also have met the nexus standard for each individual state's standard, then collect, remit, and report sales taxes;
3. Depending on the state requirements, sellers may now also be required to report, file and remit state income taxes.
What can be done? Not a whole lot. The cards have already been dealt. However, this post should allow all of us to get started. The keyword is Wayfair. If you see any reports or posts, or articles on this subject take the time to read it. Then ask questions.
As buyers, the information above should explain current and future price increases.
If you are a seller, start looking at your sales by state and then research the Nexus standards for that state. Start planning now to meet these standards. As we say in my profession, "Ignorance of the law is not a defense"! Since each state will probably have different reporting and compliance standards, it's impossible to make a general statement as to whether or not you will be affected by this SCOTUS decision. The Sikich hyperlink above provides some current information, but this is an evolving situation that may change from year to year.
From my perspective, if you are considering a large purchase amount from an out-of-state or Internet seller, then December 2018 may be a great time (financially) to "Pull the trigger"!!!
Bill
In June 2018 the United States Supreme Court made a significant decision related to the collection of sales taxes from out-of-state sellers and buyers in "The State of South Dakota vs. Wayfair Incorporated".
Your opinions may be significantly different from mine.
I just completed a Continuing Professional Education (CPE) webinar today from the State of Texas Comptroller's office on the subject of franchise taxes. Their franchise tax is similar in form to a state income tax on businesses. At the conclusion of the webinar I submitted a question to the Moderator related to the state's plan for the implementation of the June 21, 2018 United States Supreme Court decision in the Wayfair case. The subject matter for this landmark case included both the standards for the levying of state sales taxes and the establishment of a "Nexus" from out-of-state sellers.
In response to the "Nexus" definition question:
What establishes nexus in a state?
Nexus, also called "sufficient physical presence", is a legal term that refers to the requirement for companies doing business in a state to collect and pay tax on sales in that state. For example, if you sell goods or services in Los Angeles, you must file and pay California state taxes.
For many years this issue has predominantly been associated with Internet sales across state lines. In a past court decision in the Quill Corporation vs. the State of North Dakota “ a physical presence" (brick and mortar facility] was required before there was a "Nexus" established and a requirement to collect state sales taxes. The Quill decision explains why many Internet sellers (i.e. Amazon and Cabelas) are now collecting state sales taxes in the location of the Buyer, at the Buyer's local rate. This situation did not occur in the past.
In June of this year in the Wayfair decision, the U. S. Supreme Court (SCOTUS) ruled that the brick and mortar presence standard in Quill was "unsound and incorrect". The Supreme Court overruled Quill and ruled in favor of the State of South Dakota, and not Wayfair Inc.
The rule for collecting sales taxes from sales to residents of South Dakota is that if you: a) have annual sales of $200,000 or more OR b) have 200 or more transactions each year you must collect, remit, and report sales taxes. As you might expect, this same standard is not the same for all states, and not all of the states have realized that they just won the "Power Ball Jackpot" for fixing their revenue and budget deficit problems. This hyperlink is a very good starting point - Update on State Responses to Wayfair - Sikich LLP My recommendation is to contact the state comptroller's office.
I'm chugging (choogling ??) along in the webinar and thinking to myself, if the states now have a license to kill for the collection of sales taxes, what about state income taxes???
Here's the response that I received this afternoon from the Texas Comptroller's office that has some excellent information, references with hyperlinks, and that also includes a Frequently Asked Questions (FAQs) section.-https://comptroller.texas.gov/taxes/sales/remote-sellers.php
I was right on target!
What does all of this mean for us????
Individual states can now, or will in the future, require that:
1. More out-of-state and Internet sellers increase the prices that we pay for the collection of our state sales taxes;
2. In the future (probably 2019 or 2020) Sellers will probably (To Be Determined) have to determine if they also have met the nexus standard for each individual state's standard, then collect, remit, and report sales taxes;
3. Depending on the state requirements, sellers may now also be required to report, file and remit state income taxes.
What can be done? Not a whole lot. The cards have already been dealt. However, this post should allow all of us to get started. The keyword is Wayfair. If you see any reports or posts, or articles on this subject take the time to read it. Then ask questions.
As buyers, the information above should explain current and future price increases.
If you are a seller, start looking at your sales by state and then research the Nexus standards for that state. Start planning now to meet these standards. As we say in my profession, "Ignorance of the law is not a defense"! Since each state will probably have different reporting and compliance standards, it's impossible to make a general statement as to whether or not you will be affected by this SCOTUS decision. The Sikich hyperlink above provides some current information, but this is an evolving situation that may change from year to year.
From my perspective, if you are considering a large purchase amount from an out-of-state or Internet seller, then December 2018 may be a great time (financially) to "Pull the trigger"!!!
Bill
