Nebraska seeks to codify remote sales tax law

Update 3.18.2019: The Nebraska Legislature has presented LB284 to Governor Pete Ricketts, who is expected to sign it.

The Nebraska Department of Revenue started requiring remote retailers to collect and remit Nebraska sales tax on January 1, 2019. Now, the Nebraska Legislature is looking to turn the department rule into law with a later effective date.

On June 21, 2018, the Supreme Court of the United States granted states the authority to tax remote sales by overruling a long-standing physical presence rule (South Dakota v. Wayfair, Inc.). Shortly after, the Nebraska Department of Revenue announced a plan “to administer the collection responsibility consistently with the Supreme Court’s decision in Wayfair, which looked favorably upon an exception for remote sellers with sales of $100,000 or less or with fewer than 200 separate transactions in the state annually.”

Thus, the department established the $100,000 sales/200 transactions small seller exception and decided not to pursue retroactive sales tax collection from remote sellers. It did this without legislation and with an openness to “seek legislation in the 2019 legislative session as needed.”

In January 2019, three different bills were introduced. All would prevent the retroactive collection of remote seller sales tax; each has a different effective date; and two include collection provisions for marketplace facilitators or providers:

• LB18, Adopt the Remote Seller Sales Tax Collection Act
• LB284, Adopt the Remote Seller and Marketplace Facilitator Act
• LB291, Change sales and use tax provisions

Adopt the Remote Seller Sales Tax Collection Act

LB18 seeks to “bring Nebraska statutes in line with the statutes upheld by the United States Supreme Court in the case of South Dakota v. Wayfair, Inc.” As described above, a remote seller must collect and remit all applicable sales tax if, in the previous or current calendar year, the remote seller had more than $100,000 in gross revenue from the sale of property delivered into Nebraska or 200 or more separate transactions of property for delivery into Nebraska.

This measure has an effective date of October 1, 2019.

The bill would not require marketplace facilitators to collect and remit sales tax on behalf of their sellers. However, according to the fiscal note, marketplace providers who voluntarily collect tax could generate $8.75 million over the $17.5 million anticipated in fiscal year 2019–2020.

Adopt the Remote Seller and Marketplace Facilitator Act

Under LB284, remote sellers with more than $100,000 in gross revenue or 200 or more separate sales in Nebraska in the previous or current calendar year would be required to collect and remit sales tax beginning July 1, 2019.

The measure also includes a provision for marketplace sales: Marketplace facilitators whose sales surpass the threshold would be responsible for collecting and remitting tax on all sales made through the platform. They’d have to separately report the tax collected on third-party sales and the tax collected on their own sales. Both facilitators and sellers could be subject to audit.

According to the bill, “No remote seller or marketplace facilitator shall be required to collect or remit sales tax pursuant to the Remote Seller and Marketplace Facilitator Act with respect to any Nebraska sale made prior to July 1, 2019.” This is to allow “time for the Department of Revenue to develop rules and forms, and for businesses to develop procedures to comply.” The measure doesn’t address the fact that certain remote sellers should already be registered with the state and collecting and remitting sales tax.

Anticipated revenue is $8,020,833 for fiscal year 2019–2020, and $10,000,000 for fiscal year 2020–2021.

Change sales and use tax provisions

LB291 would codify the Department of Revenue’s current practice. It would also require marketplace facilitators that surpass the $100,000 sales/200 transactions threshold to collect and remit tax on all sales made through the platform in the state.

A remote retailer that sells through a collecting marketplace would be required to include all Nebraska sales in its gross receipts on its tax return. However, it may claim a credit for any sales taxes collected and remitted by a marketplace platform. The remote retailer and the marketplace provider would be “jointly liable for the sales tax.”

The bill sets an “operative date” of April 1, 2019, which increases the expected revenue for fiscal year 2019–2020 to $8,750,000. Revenue projections for the following fiscal year are the same as in the other bills.

More than 35 states have some sort of remote seller sales tax law on the books, and most are actively enforcing them since the Wayfair decision. See an up-to-date list of state remote sales tax laws for more information.