Nebraska to require more online retailers collect sales tax

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July 27, 2018 - 5:06pm

Many Nebraskans who buy from online retailers will begin to see sales tax collected on those purchases beginning in January. The state Department of Revenue issue new guidance to retailers Friday.


The action follows a U.S. Supreme Court decision last month in a South Dakota case, that retailers don’t have to have a physical presence in a state before that state can require them to collect sales tax.

The Department of Revenue says that beginning January 1, companies “engaged in business in Nebraska” will have to collect the tax.

“Engaged in business” refers to a decades-old Nebraska law predating internet sales that cover activities like advertising by mail or from a transmitter based in the state.

Tax Commissioner Tony Fulton predicts the new guidance for retailers will capture some, but not all, of what the department estimated earlier this year are $30 million to $40 million in sales tax due but not collected on online purchases. “We won’t able to collect all of that $30 million to $40 million, because there will be some remote sellers who aren’t ‘engaged in business,’” Fulton said. “In terms of percentages, I don’t know. I do know that there are a number of them who are engaged in business in Nebraska.”

Some senators have suggested that given Nebraska’s tight budget, the Legislature should be called into special session to require retailers to start collecting the tax right away.

But Fulton said the U.S. Supreme Court decision actually sent the law back to South Dakota to work out some details that aren’t decided yet. “I don’t think a special session’s required. There are still questions that are open. The South Dakota Supreme Court still has not ruled on the remanded question. So what would we pass?” Fulton said.

Fulton says the department will administer responsibility for collections consistent with the Supreme Court ruling, which looked favorably on an exception for companies with sales of $100,000 a year or less, and those with fewer than 200 separate transactions in a state.

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