Is Tennessee coming close to a settlement of its Wayfair-like case?
Steve DelBianco, president and CEO of NetChoice, told Bloomberg Tax Sept. 4 the parties to a pending lawsuit over Tennessee’s South Dakota-style economic nexus statute are currently addressing how to resolve it “on terms acceptable to all.”
The June 21 Wayfair ruling—which tossed out Quill Corp. v. North Dakota, the Supreme Court’s 1992 physical presence threshold for when states could tax remote sales—has many states looking to expand their authority over online sales taxation. The majority in the 5-4 ruling suggested strongly that South Dakota’s law would pass constitutional muster; the statute imposes a tax collection threshold at 200 transactions or $100,000 in in-state sales.
The court stopped short of formally declaring South Dakota’s law valid in the absence of Quill, and a South Dakota circuit court still has to bless the state’s economic nexus model before it can become effective. The state legislature is coming into a special session later in the month to consider bills that could resolve the situation, and the parties to the South Dakota case are also in settlement talks.
In the wake of the groundbreaking decision, dozens of states that haven’t already done so are mulling whether to copy South Dakota’s law.
In Tennessee, the state court considering the matter has set a status conference for Nov. 8, DelBianco said. Samantha Fisher, a spokeswoman for the Tennessee Office of the Attorney General, confirmed the Nov. 8 date but declined to comment on the matter.
“In the meantime, the Tennessee economic presence rule is suspended by both an order of the court and an act of the Tennessee legislature which requires that the rule be reviewed by the legislature before it can be enforced,” DelBianco said in an email. The Tennessee Legislature is scheduled to reconvene Jan. 8, 2019.
Montana: Seek Advice
Montana doesn’t have a state sales tax. That hasn’t stopped the state from providing news for sellers who might be affected by the Wayfair ruling.
In an advisory on the Montana Department of Revenue’s web site, the state notes that Montana businesses selling products online to buyers in other states—such as South Dakota—will need to “collect and pay those sales taxes.”
If you’re an online retailer in Montana, “please seek competent legal advice on how to proceed with collecting and remitting sales tax for sales tax states such as South Dakota,” the department said.
Daily Tax Report: State
by Tripp Baltz
September 4, 2018