SEMA eNews Vol. 23, No. 10, March 5, 2020

House Committee Holds Hearing on Impact of State Sales Tax Collection on Small Businesses

By SEMA Washington, D.C., Staff

The U.S. House of Representatives’ Small Business Subcommittee on Economic Growth, Tax and Capital Access held a hearing to review how small businesses have been impacted by the U.S. Supreme Court’s 2018 Wayfair decision, which allows states to require sales tax collection based solely on the volume of sales into that state (economic nexus). The Supreme Court’s Wayfair decision overturned its 1992 Quill decision, which required a business to have a physical presence before it could be compelled to collect sales tax.

As a result of the 2018 decision, 45 states and the District of Columbia now levy sales tax on the sale of goods, including online sales, although each state is setting minimum dollar thresholds that trigger collection of the tax. In some states, that threshold may also be tied to the number of sales transactions—for example, $100,000 in sales or 200 transactions annually. SEMA has compiled resources to help companies understand whether Wayfair impacts their businesses and provide additional information to help them respond if necessary. For more information, visit www.sema.org/state-sales-taxes.

The Small Business Subcommittee hearing, “South Dakota v. Wayfair, Inc.: Online Sales Taxes and their Impact on Main Street,” represents the first time a congressional committee has reviewed Wayfair’s impact on small businesses. The Subcommittee issued a memo highlighting the problems Wayfair has created for small businesses and identifying potential legislative solutions.

For more information, contact Eric Snyder at erics@sema.org.

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