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2018 Neb. L. Rev. Bulletin 1 (2018)

handle is hein.journals/nelrvbu2018 and id is 1 raw text is: SOUTH DAKOTA V. WAYFAIR AND TAX MODERNIZATION IN NEBRASKA Adam B. Thimmesch* On January 12, the Supreme Court granted certiorari in South Dakota v. Wayfair, a case that could have an immense impact on Nebraska. The Wayfair case involves the issue of whether states can require out-of-state vendors to collect their sales taxes on online sales. 1 Current Supreme Court precedent -Qill Corporation v. North Dakota restricts states from doing so unless the vendors have some physical presences within their boundaries. If the Court were to overrule Quill, Nebraska would presumably have greatly expanded power and could see up to $95 million in additional annual tax collections.2 That amount of revenue could be critically important given Nebraska's current budget situation. This essay introduces the origin of the Court's current doctrine in this area and discusses legislation in Nebraska that would ready the state to collect this tax revenue if the Court were to overturn its long-standing physical-presence rule. I. INTRODUCTION The basic question presented in Wayfair is whether the Court should abrogate the physical presence rule of Qgill.-3 In modern discussions, that rule is best known as what protects consumers from online sales tax. The case has always been about more than online sales, though, as its * Associate Professor of Law, University of Nebraska College of Law. The tax that should be collected on online sales is technically the state's use tax rather than its sales tax. The taxes are functionally equivalent, but they are different. Sales taxes apply to in-state transactions whereas use taxes apply to in-state uses of taxable property or services. See Adam B. Thimmesch, Taxing Honesty, 118 IV. VA. L. REV. 147, 151 57 (2015). When discussing the tax collected on online sales, it is the use tax that we are discussing because the taxable sale generally occurs outside of the state where the product is ultimately consumed. 2 U.S. Gov't Accountability Off., States Could Gain Revenuefrom Expanded Authofity but Businesses are Likely to Experience Compliance Costs appx. II (Nov. 2017), KLtpsL//i ._ o. ov/ rocts /GA-1 8-1 14. 3 Petition for Writ of Certiorari at *i, South Dakota v. Wayfair, No. 17-494, 2017 WL 4404984 (Oct. 2, 2017).

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