Resources on Sales Tax Law Changes
Sales tax laws are in flux. In June of 2018, the U.S. Supreme Court issued a decision in the Wayfair case that changed the way merchants collect sales tax from their out-of-state customers. States immediately began updating their sales tax laws to reflect the Court’s decision.
The old test required a merchant to have a physical presence in a state to collect sales tax on purchases from consumers who lived in that state. Under the new regime, states can also require merchants to collect sales tax from customers in states where the merchant does $100,000 or annual sales or 200 transactions (the economic nexus test). This issue affects ETA members who work directly with merchants, particularly, small merchants, as well as those who operate in states where payment services are considered taxable for sales tax revenue.
In addition to adding the new tests for merchants, some states are looking to “marketplace facilitators” to collect sales tax on behalf of the merchants they serve. A marketplace facilitator generally means a web-based shopping platform. However, there is a risk to the payments industry that a state taxing authority could apply the term, and thus a responsibility to collect sales tax, to payment processors and/or PFACs.
To round out the discussion, a court case currently pending before the Louisiana Supreme Court – Walmart.com – focuses on if Walmart, in its capacity as a marketplace, is responsible for collecting sales tax from sales made by third-party vendors that utilize its web-based marketplace. ETA has filed an amicus in this case, opposing any application of the state sales tax law to payment processors.
Additional Resources
The new sales tax laws require careful study to ensure ETA members are in compliance with the new laws. To assist you, ETA has assembled the following resources to help ensure ETA members are in compliance with the new sales tax laws and understand their obligations.
- ETA State Sales Tax Remote Seller Chart – This chart shows state-by-state when a retailer selling taxable good or services to a customer in another state must collect sales tax.
- ETA Spotlight Call - November 5 at 2pm EST with Venable. RSVP here.
- ETA Marketplace Facilitator Chart- This high-level, state-by-state chart lays out how states have defined the term marketplace facilitator. It is a useful tool to understanding how states are thinking about sales tax obligations may apply to PFACs and payment processors.
- ETA Spotlight Call - November 6 at 2pm EST with AGG, Eversheds, and Venable. RSVP here.
- ETA Amicus in the Walmart.com Case - This case addresses the question of when a marketplace facilitator, like Walmart.com, may be responsible for collecting sales tax from third-party merchants who utilize its space. ETA filed two amicus briefs arguing that the merchants, not the marketplace or payment processors, should be responsible for collecting the sales tax. The most recent amicus is attached. Oral arguments are currently scheduled for Oct 22.