S.214 – Collecting sales tax from online retailers
S.214 – is an attempt to capture sales tax from online retailers like Amazon or Ebay, based on a Supreme Court case that was decided last year. The case (South Dakota v. Wayfair) essentially overturned a previous ruling which claimed that in order for a state to demand sales tax, the company must have a physical presence in the state. The new ruling states that if a company does a substantial amount of business in the state, then the state can demand a sales tax to be remitted from them.
This bill would require sales taxes from “marketplace facilitators” like Ebay and Etsy, as well as any seller receiving orders through a website, representative, independent contractor, etc. – which would include companies that sell via multi-level marketing techniques. The bill would also require these companies to acquire retail licenses, just as an in-state retailer would have to get.
It is worth noting that this bill does not include a sales threshold for a company to be subject to tax and license requirements, and that the Wayfair decision did not define “substantial amount of business”. As the judicial precedent has yet to be completely determined with this decision, there may be legal challenges to bills similar to this one across the country.
**The bill has been amended since this summary was posted. New changes to the bill may not be reflected in this version.