Tag: Internet Sales Tax

Virginia Plans to Advance Internet Sales Tax Legislation as Opponents Aim to Roll Back Supreme Court’s Wayfair Decision

Posted on by Trey Jackson

The Supreme Court’s recent South Dakota v. Wayfair decision allowing States to collect tax owed on remote internet sales purchases could generate an estimated $250 million in annual revenue for the state of Virginia, which is aiming to start its online sales tax program this summer. 

The Real Estate Roundtable and seven other national trade organizations wrote to congressional leaders on Sept. 17, 2018 opposing any legislation that reverses or limits the Supreme Court’s June 22 decision in South Dakota v. Wayfair, which allows States to collect tax owed on remote internet sales purchases.

  • Many states are seeking to expand their tax authority over online sales in the wake of the Supreme Court’s June 21 South Dakota v. Wayfair decision.  The 5-4 Wayfair ruling strongly suggests that South Dakota’s law requiring remote sellers to collect sales tax on more than $100,000 of in-state sales or 200 transactions complies with constitutional law.  
  • Virginia Finance Secretary Aubrey L. Layne Jr. recently told Bloomberg Tax that a state bill in next year’s Virginia legislative session would align with principles supported in the high court’s Wayfair decision.  Layne said details of the bill may be unveiled in December and added, “My guess is it probably won’t be effective until July.”  (BNA, Oct. 30) 
  • Despite the Wayfair ruling, a bipartisan quartet of House members led by Rep. Jim Sensenbrenner (R-WI) introduced legislation on Sept. 13 that would  prohibit states from requiring remote sellers with less than $10 million in national annual sales from collecting and remitting sales and use taxes – pending a compact approved by Congress.  In addition to Sensenbrenner’s Online Sales Simplicity and Small Business Relief Act of 2018 (H.R. 6824), other bills in Congress would go even further in reversing the Wayfair decision.   (Tax Notes, Nov. 7)
  • Opponents of the decision are asking Congress to include restrictions on States in an end-of-year bill.  (Bloomberg, Oct. 24).  However, legislation to roll back Wayfair is unlikely.  Any major legislation must be negotiated by leaders of both parties, who have limited time during a Lame Duck session.  Congressional negotiators are expected instead to focus on a handful of “must pass” bills. 
  • The Real Estate Roundtable and seven other national trade organizations wrote to congressional leaders on Sept. 17 opposing legislation that reverses or limits Wayfair.  (Wayfair Comment Letter, Sept. 17) 

The business coalition letter explains that for more than a decade, industry groups “have undertaken significant efforts to establish economic parity between online and brick-and-mortar sellers that would better reflect the changing dynamics of today’s omnichannel marketplace. For Congress to insert themselves post-ruling only creates additional uncertainty and further complicates the implementation process, while undermining the level playing field created by the Wayfair decision.”  (Roundtable Weekly, Sept. 21) 

The eight organizations conclude the letter by offering to work with Congress on any problems that may arise from state implementation of remote internet sales tax collection allowed by Wayfair.  (Roundtable Weekly, June 22)

 

Real Estate and Business Organizations Oppose Legislation Challenging Supreme Court Decision on Internet Sales Tax

Posted on by Abigail Grenadier

The Real Estate Roundtable and seven other national trade organizations wrote to congressional leaders this week opposing legislation that reverses or limits the Supreme Court’s June 22 decision in South Dakota v. Wayfair, which allows States to collect tax owed on remote internet sales purchases. (Wayfair Comment Letter, Sept. 17)

The Real Estate Roundtable and seven other national trade organizations wrote to congressional leaders this week opposing legislation that reverses or limits the Supreme Court’s June 22 decision in South Dakota v. Wayfair, which allows States to collect tax owed on remote internet sales purchases.

  • Despite the high court’s Wayfair ruling, a bipartisan quartet of House members led by Rep. Jim Sensenbrenner (R-WI) introduced legislation on Sept. 13 that would bar states from collecting taxes from out-of-state internet vendors until 2019.
  • Other bills would go even further in reversing the Wayfair decision.  They include the Stop Taxing Our Potential Act of 2018 (S. 3180), introduced by Sen. John Tester (D-MT) and the Protecting Small Business from Burdensome Compliance Costs Act (H.R. 6724). introduced by Rep. Bob Gibbs. The likelihood that legislation challenging Wayfair will get through the current Congress, especially with the mid-term elections fast approaching, is slim.  (Politico, Sept 17)
  • The business coalition letter to Senate and House leadership explains that over the better part of a decade, these industry groups “have undertaken significant efforts to establish economic parity between online and brick-and-mortar sellers that would better reflect the changing dynamics of today’s omnichannel marketplace. For Congress to insert themselves post-ruling only creates additional uncertainty and further complicates the implementation process, while undermining the level playing field created by the Wayfair decision.” 

The eight organizations conclude the letter by offering to work with Congress on any problems that may arise from state implementation of remote internet sales tax collection allowed by Wayfair.  (Roundtable Weekly, June 22)

 

Supreme Court Rules States Can Collect Sales Tax from Online Retailers; Uniform Collection Standards Present Significant Challenge

Posted on by Trey Jackson

The Supreme Court yesterday ruled 5-4 in South Dakota v. Wayfair to expand States’ authority to collect sales and use taxes on Internet consumer purchases from retailers who do not have a physical presence in a state. 

The Supreme Court yesterday ruled 5-4 in South Dakota v. Wayfair to expand States’ authority to collect sales and use taxes on Internet consumer purchases from retailers who do not have a physical presence in a state.

  • Real Estate Roundtable President and Chief Executive Officer Jeffrey DeBoer commended the Court’s long-anticipated ruling.  He noted the decision “rejects an antiquated ‘physical presence’ standard. That test exempted on-line retailers from collecting sales and use taxes – yet imposed those obligations on traditional ‘brick-and-mortar’ retailers.  DeBoer also noted the ruling “will enable states to collect much-needed revenue to provide public services and invest in local infrastructure projects.”  (Roundtable Statement, June 21)
  • The Roundtable on March 5, 2018 joined The International Council of Shopping Centers (ICSC), Investment Program Association, Nareit®, the National Association of REALTORS® , the National Multifamily Housing Council, NAIOP, the American Farm Bureau Federation and the South Dakota Farm Bureau Federation in filing an amicus curiae brief.  (Roundtable Weekly, March 9) 
  • While the Wayfair decision overturns previous case law, it also creates the potential for a patchwork of state-level collect and remit statutes, which may lead to efforts by Congress to simplify States’ tax collection practices. 
  • Justice Anthony Kennedy wrote in the majority opinion: “Eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems. Indeed, as the physical presence rule no longer controls, those systems may well become available in a short period of time, either from private providers or from state taxing agencies themselves. And in all events, Congress may legislate to address these problems if it deems it necessary and fit to do so.” (Supreme Court opinion, South Dakota vs. Wayfair) 
  • In the dissent, Chief Justice John Roberts reflected his belief that the decision could preclude a federal solution from Congress: “Armed with today’s decision, state officials can be expected to redirect their attention from working with Congress on a national solution, to securing new tax revenue from remote retailers.” (Supreme Court opinion, South Dakota vs. Wayfair) 

ICSC President and Chief Executive Officer Tom McGee said, “We understand this is a major step in a long process, but look forward to working with policymakers and business owners to find state-level legislative solutions which promote fairness and competition.” (CoStar News, June 21) 

The Roundable’s DeBoer added, “We stand ready to assist policymakers should they respond to today’s decision with legislation that provides our nation’s businesses with fair standards to collect the tax that is owed on online sales.”  (Roundtable Statement, June 21)