Being a state and local tax practitioner has always been a stressful job. Stress eating is certainly understandable, especially around the holidays. Nevertheless, after the Wayfair decision eliminated the physical presence requirement to compel sales tax collection, is it still necessary for states to force cookies down our throats. Not the baked kind, but the electronic variety.
As avid readers of my blog know, the states have been very creative in attributing the more than de minimus physical presence previously required by the U.S. Supreme Court in Quill to internet retailers to create sales tax nexus and require the retailers to collect sales tax. Some of these approaches, especially those attributing the presence of a representative or agent to an otherwise out of state retailer, certainly seem to make sense.
Now that Quill is dead, where will the states go next? Alternatively, is the announcement of its demise exaggerated? Will eliminating the physical presence requirement solve all our problems? What about uniformity for businesses and enforceability issues for taxing authorities? Has this all been magically resolved?
Hardly. The demise of Quill and the coronation of our new leader, Wayfair is hardly a reason to let the federal government off the hook. Now that everyone is back to work, we must remind our state legislators the need still exists for certainty, uniformity and consistency amongst the states.
Where did the half-baked idea of cookie nexus come from in the first place? You guessed it, from lack of a fair and easy to implement set of rule for both sides to follow.
In one of my favorite missteps, the Massachusetts Department of Revenue issued a 2017 Directive, which fortunately they were compelled to repeal, that stated:
When stored on magnetic tape, disc, or computer chip, this software, or set of instructions, is physically manifested in machine readable form by arranging electrons, by use of an electric current, to create either a magnetized or unmagnetized space.
Since I was an accounting major at the undergraduate level, I never learned about the arranging of electrons. They skipped this in law school as well. However, I have and continued to learn about our clients’ constantly evolving activities so that Berdon is in best position to advise on the continually evolving, confused, and possibly unconstitutional state of nexus. I know it’s a lot to ask the feds to step in, especially as we watch the struggle to operate day to day, but isn’t it time to compel the states to get in line and uniformly proclaim whether or not cookies are good for us?
If you have questions, 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.
 Readers who have grown up watching Sesame Street (when it was still free on PBS) will immediately know that I am referring to my favorite song from the show, “Put down the Ducky.” Just so you know that I am in good company, the song was performed in whole or in part by John Candy, Keith Hernandez, Madeline Kahn, Danny DeVito, Wynton Marsalis, Gladys Knight, Barbara Walters, and Paul Simon, among others. The title for this week’s blog was inspired by the 2015 article “C is for Cookie – That’s Good Enough for Ohio” (www.alston.com/files/docs/Calhoun-Hedstrom-C-is-for-Cookie-Article.pdf) which references another well know song from the series.