Shopping Centers Today

DEC 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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D E C E M B E R 2 0 1 8 / S C T 11 applies regardless whether a seller maintains an in-state physical presence or "substantial economic nexus" or not — as being long overdue, according to tax consultant Sylvia Dion, founder and managing partner of Westford, Mass.– based PrietoDion Consulting Partners. "•e rapid pace at which states have adopted economic nexus since the Wayfair decision is evidence that they were ready to pounce on the opportu- nity to tax out-of-state sellers," she said. Most states adopting the rules are following triggering thresholds similar to those of South Dakota, where online sales exceeding $100,000 or upwards of 200 transactions push sellers over the state sales-tax line, Dion said. Gov. Jim Justice of West Virginia says he changed his opposition to the state's online sales-tax push aˆer investigating the issue more thoroughly. "I had the opportunity to talk to several retail stakeholders and realized that by not collecting these taxes, we were creating an unfair disadvantage to main-street businesses," Justice said in a prepared statement. •e sales-tax collections in West Virginia commence on Jan. 1. In Texas the state comptroller has asked lawmakers to support a measure allowing sellers to opt out of any of the state's 1,500 local taxing jurisdictions for e-commerce sales and comply instead with a standard 1.75 percent local sales-tax rate added onto the state's 6.25 percent. •e pro- posal, subject to stakeholder review, will come up in the January legislative session. •is compromise was de- signed as a less burdensome alterna- tive for taxpayers while still being a means to address Wayfair, according to Kevin Lyons, a spokesman for the Texas comptroller's o•ce. •e o•ce is proposing an annual threshold of $500,000 in sales for online sellers. Ohio and Wyoming have pending court cases that may be dismissed in light of the Wayfair decision, Tyson says. Meanwhile, numerous states are also hastening to impose tax laws and regulations on such marketplace facil- itators as Amazon.com, eBay, Etsy and others with third-party sellers active on their sales platforms. •ere are 45 states with a state sales tax in place, while Alaska, Delaware, Montana, New Hampshire and Ore- gon collect no sales tax. Several states had established their own sales-tax provisions before the Supreme Court decision, including Massachusetts, which last year set Internet thresholds in excess of $500,000 in sales and 100 transactions. And in what is being dubbed a "cookie nexus," Massachu- setts maintained that the Internet cookies and similar tech applications on the devices customers use for buying products from out-of-state merchants essentially equate to a physical presence within the state. A number of states went live with their new remote-sales-tax requirements on Oct. 1, notably Alabama, Illinois, In- diana, Kentucky, Maryland, Michigan, Minnesota, Nevada, North Dakota, Washington and Wisconsin. •e Wayfair ruling reversed the 1992 Quill Corp. v. North Dakota decision that had restricted states from imposing sales tax on remote sellers. High Court dissenters on the Wayfair case held that any such tax-formula changes should be leˆ up to Congress. •e importance of the Supreme Court decision cannot be overstated, according to Todd Schafer, a Detroit- area commercial tax lawyer with Dawda, Mann, Mulcahy & Sadler. By some estimates, the dollars lost to state sales-tax collections this year minus the Supreme Court changes would have exceeded $30 billion, he says. States may eventually push collec- tively for a national federal framework that would simplify the tax for states and other tax jurisdictions, observed Susan Ha•eld, a partner with Price- waterhouseCoopers, at a tax forum in Nashville, Tenn., in October. Since Wayfair, three federal proposals that were intended to reverse or curb the Supreme Court ruling were intro- duced but given no congressional consideration. An eventual federal solution would bring about some needed uniformity, says Dion. "While the $100,000 is a fairly signi£cant revenue threshold, the '200 or more separate transactions' stipulation could very well mean that even retailers with very small sales could be subject to registration, collection and remittance responsibil- ities," she said. For a small seller with products selling for, say, $10 each, a mere $2,000 in sales would create economic nexus, Dion argues. And the revenue threshold in some states is as low as $10,000, while in others it is as high as $500,000 — with some of those including wholesale and other tax-ex- empt sales and services in the formula, she points out. Owners of shopping centers and other retail properties that Schafer has spoken with say they expect compli- ance with the Supreme Court decision to result in healthier community-based retailers, improved foot tra•c and improved sales. •is, according to Schafer, "will in turn increase the value of those retail properties."¦ Q I had the opportunity to talk to several retail stakeholders and realized that by not collecting these taxes, we were creating an unfair disadvantage to main-street businesses

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