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SALT TALK: Online Retailers – You’re Not in Kansas Any More

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 3, 2019 11:30:00 AM
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Based on the calendar and the devastation of Hurricane Dorian, there is no doubt that we are at the height of hurricane season. Tornado season, I’m told, peaks from about May to July. While prepared, I was surprised that the Kansas Department of Revenue waited until August 1, 2019 to issue Notice 19-04, “Sales Tax Requirements for Retailers Doing Business in Kansas.” 

Virtually every state that has a sales tax has by this time asserted some type of “Wayfair” nexus and sales tax obligation on remote sellers. By overturning the physical presence requirement to impose a sales tax obligation, the U.S. Supreme Court invited the states to impose a sales tax collection obligation on sellers never setting one foot within their borders.

Most states, either by legislation or some type of administrative proclamation, have been careful not to overextend the Supreme Court’s invitation by establishing a threshold based on the number of transactions, the dollar volume or both into the state, before requiring a remote seller to collect tax. While I would like to think many states established these thresholds out of a common-sense business approach, most were likely cautious of not extending themselves beyond the limits of the South Dakota statute that was the subject of the Court’s decision ($100,000 or 200 transactions).

Kansas instead has taken us by storm. The notice has no reference to a dollar or transaction threshold and seems to indicate that any and all remote sellers must register and collect tax. While many states choose to be more selective (both by statute and administration) in how far they will push nexus, clearly the Kansas statute permits the Department to require a retailer to collect and remit tax “under the provisions of the constitution and laws of the United States.”

Does the Kansas Department of Revenue really believe a no threshold administrative pronouncement is within the confines of the Wayfair decision? Is the Department looking to see how far the courts can be pushed? We are all going to have to wait and see.

If you have questions about sales tax requirements contact me at wberkowitz@berdonllp.com or your Berdon Advisor.

Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.

Topics: SALT TALK

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