While a lot of attention has been focused on the Wayfair decision and how it can require an out of state seller to collect sales taxes on behalf of a state under certain conditions, it is important to remember that prior laws that were written to work with the Quill decision are still on the books. As the Supreme Court noted in the Wayfair decision, Quill seemed to stand for the proposition that any physical presence in a state enabled a state to impose a sales tax collection requirement. Thus, such statutes were sometimes drafted with a very low de minimis exception for out of state sellers, well below the $100,000 level found in South Dakota’s statute.
The state of Idaho has announced plans to continue to move forward with enforcing the state’s affiliate agreement nexus law and that the Idaho State Tax Commission has contacted 500 out of state sellers to “remind” them of the requirement to begin collecting the tax (“Some out-of-state retailers required to collect Idaho sales tax”, Idaho State Tax Commission News Release).
The Idaho tax is triggered at a much lower level of activity than that imposed by the state of South Dakota’s pure economic nexus statute that the Supreme Court commented favorably on. But it does require a “physical presence” of a sort via an affiliate agreement.
Specifically, the Idaho Tax Commission release notes that the law requires collection when two conditions are met:
- The out-of-state seller has an agreement with an Idaho retailer to refer potential buyers to the out-of-state seller for a commission that’s paid on each resulting sale, and
- Total sales to Idaho buyers through these agreements exceed $10,000 in the preceding 12 months.
The release notes that a business that needs to begin remitting the tax can register at http://tax.idaho.gov/ibr.
The Commission also notes that the state continues to study the Wayfair decision and its implications. As the release continues:
Meanwhile, the Tax Commission is carefully analyzing how the U.S. Supreme Court’s recent “Wayfair” ruling affects out-of-state retailers making sales to Idaho citizens. The agency also continues to follow developing legal issues related to the court’s decision. The Wayfair ruling upholds a South Dakota statute requiring out-of-state retailers to collect and forward the tax to South Dakota if the retailer has an economic connection as opposed to a physical presence in that state.