In a turnaround to trends seen early this decade, 2014 may be kicking off with faint signs that legislation and court rulings could favor U.S. commerce for once by bringing sales tax relief.
The U.S. Supreme Court ruling in Daimler AG v. Bauman found that Argentine plaintiffs could not sue the German-based company in California because Daimler’s American subsidiary couldn’t be considered “at home” in California and therefore the laws of due process prevent that.
This ruling has positive implications for cases opposing the concept of economic nexus. Several states in recent years have declared that doing business in a state is enough to create nexus even if the company in question has no physical presence in that state. The Supreme Court’s ruling may call into question the constitutionality of such state laws.
On the other hand, the mega company Amazon has acquiesced and agreed to collect taxes in no less than 20 states to date. These states are Arizona, California, Connecticut, Georgia, Indiana, Kansas, Kentucky, Massachusetts, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin. South Carolina is on track to start forcing Amazon to collect state taxes beginning in 2016. The scope of states that had defeated Amazon in court boded well for the potential of the Marketplace Fairness Act legislation.
But in a potentially positive turn, talk about the Marketplace Fairness Act has all but disappeared from the national conversation. With the near-total gridlock in Congress, this proposed legislation looks unlikely to gain traction this year.
In other news, states allowing sales tax holidays are talking about extending or increasing the scope of their tax exemptions. Florida and Wisconsin legislatures are discussing such expansions.
While not a “done deal” by any means, the potential for American companies to win a few battles this year seems more likely than it has in quite some time. It would be great if these potential wins would actually make collecting sales tax easier … but sorry … not this year.Charles F.
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