South Dakota V. Wayfair, Inc.

On June 21, 2018, the U.S. Supreme Court issued a decision in South Dakota v. Wayfair.  The Court overruled Quill Corp. v. North Dakota and the requirement that a retailer must have a physical presence in a state before the retailer can be required to collect sales tax in the state.   The Court also noted several features of the South Dakota law that are designed to prevent unfair treatment for businesses who sell goods and services.  These features include South Dakota’s exceptions for small sellers, the prospective application of the sales tax collection requirement, and membership in the Streamlined Sales and Use Tax Agreement. 

On May 30, 2018, Iowa Governor Kim Reynolds signed Senate File 2417 (SF 2417), an extensive state tax reform bill to improve the tax structure in Iowa.  This legislation contains changes to Iowa income, corporate, sales and use, local option sales, hotel and motel, and vehicle rental excise taxes.  This law modernizes and expands the types of businesses required to collect Iowa sales tax.  Specifically, marketplaces and remote sellers that exceed certain sales or transaction thresholds must charge sales tax the same as Iowa main street businesses.  Some of these provisions are identical to the South Dakota law at issue in the Wayfair case.  Under existing law, sellers that are not required to collect tax may voluntarily do so.  Otherwise, consumers owe use tax directly to the Iowa Department of Revenue.