The 2018 South Dakota v. Wayfair ruling allowed counties, states and municipalities to pass laws to tax out-of-state sellers and the eCommerce marketplaces that serve them, but the ruling did not disclose specifications on what such laws must look like. State and local governments have been figuring it out for themselves in the absence of Supreme Court guidance — and, at times, provoking businesses’ ire in doing so.
Governments and businesses have recently been fighting in court over disputes regarding remote seller tax policies. The latest spate of lawsuits has seen a small Louisiana parish going head to head with Walmart, and even an Alabama county fighting itself over how to properly disburse revenue from its online sales tax.
The November Next-Gen Sales Tax Tracker examines the latest legal battles over the U.S.’ still-developing tax landscape, and explores other critical updates.
Around The Next-Gen Sales Tax Landscape
Alaskan municipalities are seeking to make life easier for remote sellers. The state does not have its own tax policy, so towns and cities are setting their own individual tax rules. A recent effort is underway to make compliance more streamlined for businesses that interact with the more than 100 local tax jurisdictions, and to make tax administration easier for those municipalities as well.
Though tax compliance may be painful for businesses, those taxes are making positive impacts on residents’ lives. Wisconsin recently announced that its eCommerce sales tax collections are enabling it to reduc
e income taxes on the state’s lowest earners by a commensurate amount. The state government can, therefore, give financial relief to the lowest and second-lowest income tax brackets, without cutting into resources the state needs to continue providing all of its current public services.
Residents in states that have yet to enact remote seller taxes may be missing out. Missouri-based nonprofit Faith, Justice & Truth Project released a report estimating that the state could take in $600 million if it implemented such taxes. Missouri could face a dwindling tax base otherwise, as residents with the means to do so increasingly take their shopping online. Residents on the other side of the digital divide, meanwhile, will be unable to escape sales taxes — and, thus, unfairly end up paying more into the state for services from which all residents benefit, the report said.
Find more on these and the rest of the latest headlines in the Tracker.
The Economic Case For Remote Sales Tax Simplification
Lawyer George Isaacson argued Wayfair’s side in the historic 2018 South Dakota v. Wayfair case. Isaacson has watched remote sales tax policies unfold since that time in a flurry of new laws that differ by state, and even municipality.
In this month’s feature story, Isaacson explained how this disparate tax landscape favors overseas sellers compared to domestic, why more states are refraining from simplifying their tax codes and what the chances are for federal eCommerce tax legislation.
To read the story, download the Tracker.
Deep Dive: The Streamlined Sales And Use Tax Agreement’s Significance Post-Wayfair
State governments convened in 1999 to create a program intended to simplify sales tax compliance for businesses that sold into different states. That program — the Streamlined Sales and Use Tax Agreement (SSUTA) — gave guidelines to participating states, with the intention of making tax codes easier for sellers to understand and follow. Twenty-four states have chosen to join SSUTA so far, and with the Wayfair ruling producing new tax compliance challenges, questions have risen over whether more states should consider joining.
This month’s Deep Dive examines the extent to which SSUTA membership could ease remote sales tax compliance pains, and how the agreement could be updated to better address today’s challenges. Find the Deep Dive in the Tracker.
About The Tracker
The Next-Gen Sales Tax Tracker, done in collaboration with Avalara, is the go-to monthly resource for updates on trends and changes in the world of eCommerce sales tax.