Many online retailers to start collecting sales tax from Nebraska customers in 2019

January 1, 2019

LINCOLN — Nebraskans could see a little extra added to their checkout price if they buy online this year.

State revenue officials have set Tuesday as the deadline for larger online retailers to start collecting sales taxes from their Nebraska customers.

Nebraska Tax Commissioner Tony Fulton said Monday that the requirement follows a June decision by the U.S. Supreme Court. The ruling opened the door for states to force online retailers to collect sales taxes, even if they have no store, warehouse or other physical presence in a state.

Officials in Nebraska delayed enforcement to give retailers a chance to adjust to the change and get sales tax permits from the state.

Fulton said there has been no surge in permits as Jan. 1 approached.

Rather, he said the number of businesses registering to collect sales taxes has shown a steady increase since online giant Amazon agreed to start collecting the taxes voluntarily two years ago.

The taxes to be collected are not new. Long-standing state law requires Nebraskans to pay sales taxes on purchases online or from out-of-state mail-order catalogs.

If taxes are not collected by a retailer, customers are supposed to pay directly to the state. In practice, however, most do not pay.

Fulton said revenue officials plan to enforce the tax collection requirement only for businesses with more than $100,000 worth of sales or at least 200 separate transactions in Nebraska during the year.

Those thresholds match exceptions in the South Dakota law that was considered by the Supreme Court. The court cited the exceptions as factors in determining that the law did not pose an unconstitutionally undue burden on interstate commerce.

While current Nebraska law has no tax collection exception for smaller businesses, Fulton compared the decision not to go after smaller retailers to a prosecutor’s discretion about filing criminal charges.

But he also said revenue officials will be asking the Nebraska Legislature to put exceptions in the law.

In the meantime, he said smaller businesses can collect taxes voluntarily. Businesses that cross either threshold during a year would be given at least 30 days to start collecting on future sales.

Fulton said the legislative proposal may include other changes related to online sales tax collection, but those have not been decided yet.

In July, Gov. Pete Ricketts said he did not believe legislation was needed for Nebraska to start collecting online sales taxes.

On Monday, Fulton said existing law requires retailers “engaged in business” in Nebraska to collect sales taxes and he argues that the Supreme Court decision simply extended the law to cover online retailers.

But some lawmakers have questioned that conclusion. State Sen. Tom Briese of Albion argued that lawmakers need to clarify the “engaged in business” law to ensure that it covers online retailers.

For example, the current law applies to retailers that solicit business through advertisements broadcast on Nebraska radio or television stations or sent through the mail. It is unclear whether it applies to solicitations done online only.

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