Jan 19, 2022
As we advised in Tax Tip 20-04 , significant additional disclosure and filing requirements for trusts were announced in the 2018 Federal Budget and are scheduled to apply for trust’s 2021 and subsequent tax years.
In light of the United States Supreme Court South Dakota v. Wayfair et al decision, 585 U.S.__(2018) (see U.S. Tax Tip Volume No. US-18-14) many states are moving to enact legislation allowing them to impose sales tax collection requirements on out-of-state sellers. The Wayfair case dealt with the Commerce Clause and a state’s ability to require out-of-state sellers to collect and remit the state’s sales tax. The Streamlined Sales Tax Governing Board, Inc. (www.streamlinedsalestax.org) is moving forward on this issue.
In the prior Quill Corp. V. North Dakota, 504 U.S. case, the majority of the Supreme Court expressed concern that “a state tax might unduly burden interstate commerce, by subjecting retailers to tax collection obligations in thousands of different taxing jurisdictions.” 504 U.S., at 313, n.6.
In his Wayfair opinion, Justice Anthony Kennedy, stated:
“That said, South Dakota’s tax system includes several features that appear designed to prevent discrimination against or undue burdens against interstate commerce. First, the Act applies a safe harbor to those who transact only limited business in South Dakota. Second, the Act ensure that no obligation to remit the sales tax may be applied retroactively. Third, South Dakota is one of more than 20 States that have adopted the Streamlines Sales and Use Tax Agreement. (Italics added) This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.”
The Streamlined Sales Tax Governing Board, Inc. has set an emergency meeting for July 19th and 20th in St. Paul, MN. Per their website “The focus of this meeting will be discussions related to implementation of remote sales tax collection authority in light of the United States Supreme Court’s decision in South Dakota v. Wayfair et al, to ensure smooth, efficient and transparent implementation.”
There are 24 SSUTA member states including: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming. 12 of the member states have already enacted economic nexus models that impose sales tax collection duties.
What is clear is that individual states are starting to move on this issue.
Cadesky U.S. Tax continues to be on top of the latest U.S. sales tax developments. We can assist in determining whether you have sales tax nexus with a state, registering with that state and the filing of any returns. Please reach out to your Cadesky U.S. Tax Ltd contact for more information.
U.S. TAX TIP is provided as a free service to clients and friends of Cadesky U.S. Tax.
The material provided in this U.S. Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither Cadesky Tax nor Cadesky U.S. Tax can accept any liability for the tax consequences that may result from acting based on the contents hereof.