Sales Tax Update: Wyoming and Ohio

Sales Tax Fairness Bill Moves Forward in Wyoming

On Friday, November 18, the Wyoming Legislature’s Joint Revenue Interim Committee voted to advance a bill that would require remote online retailers to collect sales tax on purchases made by Wyoming residents, as reported by the Wyoming Tribune Eagle. The bill will now go to the full state legislature when it convenes in January.

The Eagle noted that supporters of the measure argue that, if passed, the law would level the playing field for businesses in Wyoming, since customers could be swayed from buying items online to avoid paying state sales tax.

Any business that does not conduct at least $100,000 in sales or 200 separate transactions in Wyoming annually would be exempt from the sales tax collection requirement.

Sen. R. Ray Peterson, co-chair of the Revenue Committee, told the Eagle that online retailers should not have an unfair advantage over local businesses. “It’s not a new tax; it’s the same tax we charge at our Main Street businesses,” Peterson said. “It’s a fairness issue with me.”

The state Department of Revenue forecasts that Wyoming could recoup between $23 million and $46 million annually if online sales tax were collected, the article reported.

Ohio Supreme Court: State Can Tax Remote Businesses Lacking Nexus

In a 5–2 decision, the Ohio Supreme Court has ruled that the state can impose its commercial activity tax (CAT) on out-of-state businesses that lack a physical presence in the state, the Columbus Dispatch reported. CAT is an annual tax imposed on “the privilege of doing business in Ohio,” according to the Ohio Department of Taxation, and is measured by gross receipts from business activities in Ohio.

The state has a $500,000 annual sales threshold before CAT is imposed. In his ruling, Justice William M. O’Neill noted that while nexus might be necessary in the case of sales tax, the U.S. Constitution does not forbid the collection of CAT, the Dispatch reported. Crutchfield Corp., Newegg Inc., and Mason Companies had appealed to Ohio’s Board of Tax Appeals after the Board ruled that the companies owed CAT. The companies had refused to pay the tax because they were out-of-state businesses.

In a statement, Ohio Tax Commissioner Joseph Testa said: “The Court’s decision recognizes Ohio’s legitimate interest in applying its singular general business tax evenhandedly on both in-state and out-of-state businesses. It is reasonable that out-of-state businesses, who enjoy over $500,000 annually in gross receipts from Ohioans, should pay the CAT just as their Ohio peers do.”