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Maps show crazy U.S. quilt of state sales tax nexus laws

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There could be some consistency in how states collect sales tax on consumers' online purchases if the Supreme Court agrees to hear a South Dakota case.

Many states are ignoring the sales tax law of the land, decided in 1992 by the U.S. Supreme Court's ruling in Quill v. North Dakota.

Soon another Dakota high court case, this one from South Dakota, could change the state sales tax collection law for remote sellers.

On Sept. 14, the Mount Rushmore State's quest to collect sales tax from online et al retailers was rejected by that state's highest court. That's just what South Dakota wanted.

Following the state court loss, South Dakota asked the U.S. Supreme Court to revisit its original nexus ruling in light of new technology and burgeoning online sales.

Changing times, changing ruling? Twenty-five years ago, sales from out-of-state vendors were done by mail order catalog or phone.

The Supreme Court of the U.S. (SCOTUS) said back then that states could not demand or collect sales tax from the catalog sellers if the selling companies did not have a physical presence, or nexus, in the taxing state.

Even the S.D. judge who rejected the state's arguments noted that "however persuasive the State's arguments on the merits of revisiting the issue," the decision to set aside Quill's nexus requirement must come from SCOTUS.

That's likely to happen, say most legal eagles.

Mapping state remote sales tax laws: Meanwhile, as we wait for the nine justices in D.C. to say they'll take South Dakota's case, we're left with a crazy quilt of various state remote sales tax collection efforts.

The mapping of those myriad nexus collection and reporting rules earn MultiState Associates the latest Shout Out Sunday recognition.

Specifically, the state and local government relations services firm with offices in Alexandria, Virginia, and Great Neck, New York, prepared three maps that South Dakota used in its U.S. Supreme Court petition.

The maps, note MultiState's Joe Crosby, Liz Malm and Ryan Maness, show the state of the law with regard to sales and use tax nexus. They explain:

Quote iconThese maps place state laws into one of two buckets: 1) those which seek to expand nexus (arguably) within the constitutional framework articulated by the Supreme Court in a series of cases; and, 2) those which discard physical presence as the touchstone for nexus or which impose notice and reporting requirements on non-collecting sellers. In other words, we've divided these laws into the old and the new approaches states are taking to further collection of legally due sales and use taxes. (Note: "law" encompasses statutes, regulations, and administrative positions and practices, to the best of our knowledge.)

Below is the map showing current and proposed state laws regarding non-physical nexus and notice/reporting of sales taxes. I admit I picked it to showcase because it's the most colorful of the three!

UPDATED MAP 2- Current or Considering- Non-Physical Nexus and Notice2FReporting

But also check out the other two maps (current law on non-physical nexus and notice/reporting and current law on expanded physical nexus) at MultiState.

In addition to the graphics, Crosby, Malm and Ryan offer some textual (and contextual) insight into the convoluted state of state remote sales tax collection efforts.

Hopefully, SCOTUS will soon clear things up for us all.

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Missy@ Mighty Taxes

A lot of online stores are dropping bloggers / affiliates, like myself, because of these complicated nexus laws. As u can see in the map, residents of densely populated areas like CA, NY, NJ, PA are not very friendly for stores who wish to avoid paying these taxes. Ugh!

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