Conformity to recent federal income tax changes is not the only challenge (or opportunity, depending on your point of view) facing the 2019 Virginia General Assembly. It may also be asked to amend Virginia’s sales and use tax rules, so the tax can be demanded from out-of-state sellers.
A recent review from the Tax Foundation provides concrete advice on the steps Virginia should take to bring its rules in line with recent direction from the U.S. Supreme Court, which reviewed and blessed South Dakota’s approach in the Wayfair decision. It also points to several states ready to roll or almost in compliance, including North Carolina. Each state is discussed in the report.
The Wayfair ruling reversed two previous decisions that states could not force businesses with no physical presence inside their border to collect and remit the tax. The tax advantage for online sales has been fought by traditional retailers for decades.
The first and most difficult recommendation is Virginia should adopt the uniform sales tax definitions and rules of the interstate Streamlined Sales and Use Tax Agreement (SSUTA), a step South Dakota has already taken that played a key role in the majority’s opinion.
by Steve Haner
September 3, 2018