Meet the Co-chairs - TAGLAW
Williams Mullen (VA)
Meet the Co-chairs - TIAG
Mercer & Hole
Cohen & Company (Ohio)
Fineman West & Co. LLP
On June 21, 2018, the U.S. Supreme Court released its much-anticipated opinion in South Dakota v. Wayfair, Inc., in which it held that physical presence within a State is no longer a prerequisite to the imposition of liability on out-of-state sellers to collect and remit sales taxes. In doing so, the Court overruled two of its own earlier cases—National Bellas Hess, Inc. v. Department of Revenue of Illinois and Quill Corp. v. North Dakota.
In Wayfair, the Court upheld a 2016 South Dakota sales tax law that required out-of-state sellers with no physical presence in the State to collect and remit sales tax if they annually delivered more than $100,000 of goods or services into the State or engaged in 200 or more separate transactions for delivery of goods or services into the State. The law was not retroactive and had provisions for expeditious judicial review. South Dakota’s courts had stricken the law as being contrary to the U.S. Supreme Court’s previous holdings in Bellas Hess and Quill.
On June 19, 2018, the U.S. Supreme Court held, in a 5-4 decision written by Justice Kennedy, that states may require an out-of-state retailer to collect and remit sales tax on purchases by residents within that state. [South Dakota v. Wayfair]. Until now, the states could not compel any retailer to collect the tax unless it had a physical presence in the state.
Wayfair is a historic ruling that will change the landscape for state sales tax collection. Many states have already enacted legislation in anticipation of a favorable ruling in Wayfair, and it is anticipated that the states that have not done so will move quickly to enact such legislation to increase their revenues.
The Supreme Court announced its ruling today in the biggest sales tax case in 26 years. The ruling affects remote and online shopping by removing a limitation on a state’s ability to enforce its collection and remittance statutes against retailers who do not have a physical presence in the state.
Every state with a sales tax requires retailers to collect sales tax from customers and to pay that tax to the state’s department of revenue. A retailer with a brick-and-mortar store in a state has little choice but to comply since the law may be more easily enforced against it. However, retailers who sell by catalog or internet only, and have no presence in the state, have always argued that this requirement is unduly burdensome. The states, in turn, have had great difficulty in enforcing this law against these “remote retailers.”
If an employer settles a claim made by an employee (or former employee), the employer may generally claim a deduction for the amount that is paid to the employee to resolve his/her claims. The expense is treated as an ordinary and necessary business expense and a deduction may be claimed pursuant to Section 162(a) of the Internal Revenue Code.
On December 20, 2017, Congress passed the Tax Cuts and Jobs Act (the “Act”) instituting sweeping changes to the Internal Revenue Code. By now, many taxpayers are familiar with the ‘big ticket’ changes the Act brings to the tax code. Effective January 1, 2018, the federal estate, gift and generation-skipping transfer tax exemptions double, the standard deduction for individuals nearly doubles, personal exemptions are repealed, and the top ordinary income tax rate for individuals and trusts decreases from 39.6% to 37%, and the top corporate tax rate falls from 35% to 21%.