The Nebraska Department of Revenue recently issued a press release detailing how Nebraska will begin collecting online sales tax. On June 21st, the United States Supreme Court came to a decision in the South Dakota v. Wayfair case.
This decision overturned a precedent set in 1992 which prohibited states from collecting sales tax on sales from businesses with no physical presence in the state. With the Supreme Court ruling in favor of South Dakota, Nebraska will also require remote sellers who do not have a physical presence in the state, but who engage in business within the state, to collect and remit sales tax starting January 1, 2019.
The Department of Revenue says it is prepared to assist businesses with registering in the state, the collection of taxes, and remittance of the taxes to the state.
Nebraska Tax Commissioner Tony Fulton stated, “The Wayfair decision presents a new climate for remote sellers, and we want to be mindful of that fact. Further, we do not take for granted the great service to Nebraska performed by businesses who collect sales tax on behalf of the state. Remote sellers seeking to comply with our laws will find a respectful, professional Department ready to assist them as partners.”
One big takeaway from the Department of Revenue’s press release is that the online sales tax collection will not be retroactive. This means tax collections will not be sought out for any online sales made before January 1, 2019. The reason for not making this decision retroactive is to adhere to the Wayfair ruling. The ruling argued that online sales tax could not be collected if it created an undue burden on the business. Retroactively collecting sales tax could be in violation of this Supreme Court ruling.
This new development from the Department of Revenue will spark new conversations on what the revenue from the sales tax could be used for. Most estimates have suggested that Nebraska could bring in about $30-$40 million annually. Lawmakers will now have to decide the most effective way to use any additional sales tax revenue.