Nebraskans who purchase something online from out-of-state vendors that don’t automatically collect sales tax have broken the law, unless they’ve claimed the tax and paid it on a tax return.
Yes, we’re a state full of scofflaws. Our nation is brimming with them, too.
But efforts to mandate collection of online sales taxes have hit a snag, largely because of the current interpretation of a 1992 case by the U.S. Supreme Court that bars the practice unless a retailer has a physical presence in the state. In recent years, Nebraska is among the states that have begun to pursue a measure that would take in the required taxes that have for so long gone unpaid.
To that end, Nebraska Attorney General Doug Peterson has joined with 34 other attorneys general in filing a friend-of-the-court brief to urge the highest court in the land to again review whether businesses can be required to collect the sales tax on behalf of the states, based on South Dakota’s new statute on the topic.
The clarity Peterson and his colleagues seek is long overdue and highlights the problem with technology advancing faster than the laws governing it. For a quarter-century, brick-and-mortar stores have been obligated to charge customers for sales tax at a time when nearly all online retailers have refused to do so, with Amazon a notable exception.
All the while, virtually all of these legally required – but entirely self-reported – taxes have gone unpaid.
In a state such as Nebraska, which has grappled with tax revenues that have repeatedly fallen short of previous forecasts, those dollars would make a big difference. The looming $195 million budget gap won’t just close itself, and the state is estimated to lose between $30 million and $40 million annually to unpaid ecommerce sales taxes.
Syracuse Sen. Dan Watermeier introduced a bill in the Legislature that would mandate out-of-state retailers whose gross income in Nebraska exceeded $100,000 to collect state sales tax. Despite clearing its initial floor test, it lacked enough support to invoke cloture to end a filibuster in May.
Considering some of the stated opposition was on legal and constitutional grounds, a review by the Supreme Court would likely allay the fears of at least some senators who fought it in the spring. Even Gov. Pete Ricketts, who opposed Watermeier’s bill, supported Peterson’s effort in hopes the U.S. Supreme Court sets “clear parameters for this important issue.”
Here, the attorney general and governor are on the right page in asking for a review of South Dakota’s new law. The collection of sales tax from online purchases represents just the latest intersection between technology and laws that haven’t caught up – one that could have millions of dollars at stake for Nebraska.