How States are Reacting to the Wayfair Ruling
By Diane Yetter – As various levels of government try to figure about what the South Dakota v. Wayfair decision looks like in practice, it leaves a lot of uncertainty for sellers and their accountants on how to move forward.
For now, one of the best things we can do is look at the impact of the decision among the states and address seller reactions. In this article, however, we will stay focused on the state reactions.
State Responses to Wayfair:
State reactions to the decision have, as you can imagine, varied widely. Several state departments of revenue have been highly communicative about the impacts of the Wayfair decision on existing legislation or have indicated they are reviewing the decision. From others, we have radio silence.
To jump in, let’s start with the states with economic nexus legislation. At the time of the decision, there were 18 states that had already passed economic nexus legislation and, in many cases, had an effective date prior to the Supreme Court ruling on June 21, 2018.
In the month leading up to the decision, another four states passed legislation. Since the decision, two states have passed or taken the position that their current legislation authorized remote seller collection authority and there are more in the wings that we are waiting on.
For instance, Hawaii, Kentucky, and Vermont were quick to announce a July 1, 2018 effective date for their economic legislation. Hawaii initially considered retroactive enforcement but walked back the idea in a July 10 announcement.
Despite a July 1 effective date, Kentucky recognized that sellers will need time and preparation to comply with collection requirements and on July 30 announced a new October 1 enforcement date.
Rhode Island also issued a July effective date with an amendment proposed through a regulation that goes into effect July 31. However, Rhode Island is holding firm that their notice and reporting provisions that were effective August 17, 2017 will be enforced.
October is a big month for effective dates. Alabama, Illinois, Indiana, Minnesota, North Dakota, and Wisconsin (plus the delayed Kentucky) all have October 1, 2018 effective dates. Alabama does not have a transaction threshold, only a dollar threshold of $250,000 of sales into the state.
Meanwhile, we have yet to receive additional guidance from Illinois. Litigation is pending on the Indiana economic nexus legislation and despite an October 1 effective date, the state will not enforce the law until the declaratory judgment action is resolved.
Minnesota has a slightly different threshold at $100,000 and 10 transactions or 100 transactions regardless of total sales amount. Minnesota’s law also requires marketplace providers in addition to remote sellers to start collecting sales tax by their effective date.
Like Kentucky, North Dakota noted that sellers need time to comply with its legislation and set this later effective date. Wisconsin did not pass specific remote seller legislation, but their definition of a retailer includes anyone not prohibited under the Constitution and will develop new standards by rule consistent with the Wayfair case.
Next up is Connecticut with a December 1, 2018 effective date. Connecticut is the only “and” state for their threshold – which they changed to $250,000 and 200 transactions (previously 100).
The 2019 contingent is Georgia, Iowa, Nebraska, and Utah effective January 1, 2019. Georgia hasn’t released additional guidance since the Wayfair decision.
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