Legal Seminar, Denver, CO

071018 Discussion Draft

C. Sales Taxes. The Supreme Court’s decision in South Dakota v. Wayfair, Inc ., 585 U.S. __ (2018), which overruled the longstanding physical presence nexus requirement for sales taxes, will open up some new opportunities for state and local governments to impose and collect sales taxes on online sellers. 1. Burdensome complexity. Over 10,000 jurisdictions impose some kind of sales tax, and there is considerable complexity here in determining which taxes apply, computing them, and paying them over to the appropriate government agency. See Edward A. Morse, State Taxation of Internet Commerce: Something New Under the Sun , 30 C REIGHTON L. R EV . 1126 (1997). o That is still the case in 2018. See Wayfair, supra, in which the dissent points out: “Correctly calculating and remitting sales taxes on all e-commerce sales will likely prove baffling for many retailers. Over 10,000 jurisdictions levy sales taxes, each with ‘different tax rates, different rules governing tax-exempt goods and services, different product category definitions, and different standards for determining whether an out-of-state seller has a substantial presence’ in a jurisdiction.” (Roberts, J., dissenting; citations omitted). o The dissent also points out: “software said to facilitate compliance is still in its infancy, and its capabilities and expense are subject to debate.” Id. o But the majority is more optimistic: “Eventually, software that is available at a reasonable cost may make it easier for small businesses to cope with these problems. Indeed, as the physical presence rule no longer controls, those systems may well become available in a short period of time, either from private providers or from state taxing agencies themselves.” 2. Will payments technology provide relief? Query: will that software predicted by the majority emerge, and will it include some form of payments component that will automatically deduct and transmit the tax payment to the appropriate state/local government(s) for every e- commerce transaction? Perhaps this presents a new payments frontier for some innovative people willing to combine software with payment technology.

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