On September 13, 2018, a bill was introduced in the U.S. House of Representatives "to prohibit States from retroactively imposing a sales tax collection duty on a remote seller," among other purposes. H.R. 6824, also called the Online Sales Simplicity and Small Business Relief Act of 2018, seeks to limit the impact of the recent Wayfair decision, which eliminated the need for a business to be physically present in a state in order to have economic nexus in that state.
Back in June, the U.S. Supreme Court issued a decision in South Dakota v. Wayfair, Inc. that reversed Quill's requirement for physical presence to establish sales tax nexus for out-of-state businesses. Individual states are now hurrying to decide upon economic or transactional thresholds to govern who should be collecting and paying over sales tax concerning primarily e-commerce sales.
In a 5-4 decision, the Supreme Court ruled today that states may now require online retailers to collect sales taxes from consumers, regardless of where the business is located or the product is delivered. In 1992, the same court ruled that a business had to have some kind of "physical presence" or "nexus" in order to be required to collect sales tax in a state. With the increased use of online shopping, however, it turns out not all taxpayers report non-taxed purchases to the states in which they reside. In fact, an estimated $33.9 billion goes uncollected in sales taxes each year, costing states a significant sum. Additionally, internet shopping tax-free has hurt the brick-and-mortar stores that already have higher operational costs due to a physical presence in a state, since they must collect sales tax on taxable transactions.
Californians will be able to vote on two new legislative measures related to taxes on the June 5, 2018 Statewide Direct Primary Election ballot.
South Dakota is taking the physical presence rule back to our nation's highest court in its dispute with Wayfair, Inc., to determine whether it may continue to require out-of-state sellers such as online retailers to register with the state and collect and pay over sales tax. In the seminal case from 1992, Quill Corp. v. North Dakota, the U.S. Supreme Court ruled that retailers did not have to collect sales tax in any state where they have no physical presence. However, the exponential growth of eCommerce and internet sales has significantly changed the retail landscape since that time.
The California Secretary of State recently launched a new online portal, cannabizfile, for those interested in establishing a cannabis-related business. You will find information on topics including registering your business, trademark, or service mark; searching for business records; licensing; and registering and paying taxes with various state agencies.
On Tuesday, June 27, 2017, California Governor Jerry Brown signed into law the Taxpayer Transparency and Fairness Act of 2017. Sweeping changes to the administration of taxes and fees formerly administered by the Board of Equalization take effect on July 1, 2017. A new Office of Tax Appeals will begin hearing tax appeals of California income tax, sales tax, use tax, hazardous waste fees, and other taxes and fees effective January 1, 2018. The rules and regulations that will govern the two newly created state agencies remain a work in progress. For more information, click here.
If Congressman Jim Sensenbrenner (R-WI) and House Judiciary Chairman Bob Goolatte (R-VA) get their way, it will. On June 12, 2016, Sensenbrenner and Goolatte introduced the "No Regulation Without Representation Act of 2017" which would expand the "physical presence" requirement of a similar 2016 House Bill (H.R. 5893) to all taxes and to all regulations in general.
As of January 1st, your dollar will go a little further as California reduces its sales tax rate by 0.25%. Actual sales tax rates vary by county and city. To look up the current sales tax rate where you live, click here.
The temporary statewide sales and use tax increase approved through California's Proposition 30 expires on December 31, 2016. Effective January 1, 2017, the state sales and use tax rate in California will decrease by 0.25% to the new rate of 7.25%. The California State Board of Equalization notes, however, that in many cities and counties the total tax rate will be higher due to local voter-approved district taxes.