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1 Joseph Bishop-Henchman, 31 States Tax Internet Sellers without Physical Presence; Congress Considers Action before Wayfair Case Expands It to All 1 (2018)

handle is hein.taxfoundation/txineselp0001 and id is 1 raw text is: 31 States Tax Internet Sellers Without Physical Presence; Congress Considers Action Before Wayfair Case Expands It to All FISCAL FACT No. 579 Mar. 2018 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. @2018 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Joesph Bishop-Henchman Executive Vice President * On April 17, 2018, the U.S. Supreme Court will hear arguments in South Dakota v. Wayfair, Inc., on the constitutionality of a South Dakota law requiring collection of the state's sales tax by internet vendors with at least 200 transactions or $100,000 in sales to South Dakota residents. * The appellants in the case seek to overturn the Quill decision of 1992, which holds that states cannot force sales tax collection by vendors who do not have personnel or property in the state (the physical presence standard). * Contrary to claims that physical presence is the status quo standard, 31 of the 45 states with a sales tax have already expanded their state tax collection authority to sellers with no physical presence in the state. * Some of these laws are well-crafted, but many are not and are imposing significant and disparate compliance burdens on out-of-state sellers. To date, federal and state courts have upheld these laws, and there is strong likelihood that the U.S. Supreme Court will do so as well. * Congress may act before the Court does. The proposed Remote Transactions Parity Act (RTPA), sponsored by Rep. Kristi Noem (R-SD), would authorize states to collect sales taxes on internet purchases made by their residents, so long as the state adopts meaningful simplifications to their sales tax system. RTPA incorporates more taxpayer protections than earlier federal proposals and would ultimately make sales tax collection simpler and easier than payroll and income tax withholding or unemployment tax payments in states that choose to adhere to it. * Absent Court or congressional action, states are creating the scenario that the Commerce Clause sought to avoid: unlimited tax authority that burdens interstate commerce. Congressional proposals like the RTPA, Mobile Workforce, the Business Activity Tax Simplification Act (BATSA), and the Digital Goods & Services Tax Fairness Act would replace the physical presence standard with one that prevents taxation based on nondirected and transient activity such as internet cookies, referral links, and airport stopovers.

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