tag:blogger.com,1999:blog-2135788133426971614.post3855687448146077963..comments2024-03-28T01:09:48.303-07:00Comments on 21st Century Taxation: Two States Using Wayfair Economic Nexus Standard More BroadlyProfessor Nellenhttp://www.blogger.com/profile/03288632402197167948noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2135788133426971614.post-35650914805766658172019-09-04T12:51:16.560-07:002019-09-04T12:51:16.560-07:00John, thank you for making all of these excellent ...John, thank you for making all of these excellent points. Small and medium size vendors without a tax staff or tax department also face the challenge of keeping track of state thresholds and knowing when they cross one and have to get ready without any lead time to collect on that next sale into that state. There are software providers and companies that will help with the compliance, often charging very low fees, but I don't think all sellers know how or have sufficient time to explore all of their options.<br /><br />PL 86-272 was enacted in 1959 within 7 months of a U.S. Supreme Court decision that concerned Congress that states might get too aggressive in imposing income tax obligations (Northwestern Cement v. Minn., 358 US 450 (1959). We're beyond 7 months of the Wayfair decision, but seems to be too many other topics on the congressional agenda. 21st century taxation (Annette Nellen)https://www.blogger.com/profile/16822488200730640168noreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-37452891695884487472019-09-03T19:36:38.910-07:002019-09-03T19:36:38.910-07:00I posted this, and did not mean to do so anonymous...I posted this, and did not mean to do so anonymously. John Karayan jekarayan@gmail.comJohn Karayannoreply@blogger.comtag:blogger.com,1999:blog-2135788133426971614.post-3749632388578110492019-09-03T15:23:49.447-07:002019-09-03T15:23:49.447-07:00Excellent article.
There is more to this case t...Excellent article. <br /><br />There is more to this case than meets the eye. One basic premise of the case, that it expanded nexus is pretty much cost free, is patently false. Wayfair -- a retirement present to a judge who never prepared tax returns -- is a costly nightmare for a large number of non-large businesses. Such firms actually exist, and actually employ significant numbers of people. These are lean firms, firms without HR Departments, CFOs, large software budgets, and accounting staff with nothing to do. Dealing with another 50 tax returns a year, along with audits, lien letters, and the other baggage that accompanies expanded legal nexus, is expensive. Changing software packages is not a low cost option. There will be hell to pay; one could view Wayfair as yet another means by which big business uses regulation to unfairly compete.<br /><br />Although the only issue in the case was forcing out-of-state retailers to collect and remit use tax -- because it is too much of a burden on states to actually collect such taxes directly from their residents -- many view the case as setting the standard for all state and local taxes. If this is true, the good news is that the quite real burden on smaller business may finally prod Congress into dealing with nexus again, which it has ignored for nearly 70 years. Just as happened when the U. S. Supreme Court similarly wore their statist blinders when deciding Northwestern States Portland Cement, and Congress passed P.L. 86-272.<br /><br />The other good news is that, having, as expected, adopted an extreme version of Wayfair, California is being hoisted on its own petard: nexus limits throwback of sales, and thus is reducing "California source" income by in-state sellers on their interstate sales to states where the sellers lack people or property. <br /><br />Yes, this will be fun.<br /><br /> John Karayanhttps://www.blogger.com/profile/09597614522282055654noreply@blogger.com