In the article, Online Sales Tax Effort Crashes in North Carolina, Bloomberg BNA’s Andrew M. Ballard writes about the North Carolina Legislature’s adjournment without enacting Senate Bill 81, leaving it in the House when the session closed on June 30. The bill was an effort to capture lost revenue from remote sales—requiring North Carolina retailers with gross sales in excess of $100,000, or 200 or more separate transactions during the previous year to collect and remit sales taxes beginning January 1, 2018.
Smith Anderson Partner Bill Nelson noted that S.B. 81 provisions “could conceivably be inserted into the conference report” on Senate Bill 628, a bill with a number of proposed tax changes lawmakers will consider when session resumes on August 3, but that he was not aware of any plans to do so currently.
When asked for his opinion of the proposed tax, Bill said he does not see an advantage to having the online sales tax provisions on the books if the U.S. Supreme Court were to reverse its 1992 decision in Quill Corp. v. North Dakota, which prohibits states from imposing sales and use tax collection obligations on vendors without an in-state physical presence. “In fact,” Bill explained, “S.B. 81 as written could have potentially created an exempt class with its income and transaction thresholds were the high court to make such a ruling.”
In addition to the online sales tax measure, Bill noted the legislature’s failure to adopt market-based sourcing for allocating receipts for services and intangibles. “Because the market-based sourcing bill fell short, multistate taxpayers still will use the income-producing activities method of sourcing receipts,” Bill said. “Such means will be used even though North Carolina will shift to single-sales factor apportionment in 2018, a change being phased in through a 2015 state law. The online sales tax and market-based sourcing issues are likely to remain on the radar in North Carolina.”
Bill's experience includes tax planning for corporate acquisitions, tax-free reorganizations and divestitures, forming and advising joint ventures and private equity funds, providing tax and business law advice to limited partnerships and limited liability companies, and representing domestic and foreign taxpayers on international tax matters. His principal practice areas are federal and state taxation, mergers and acquisitions, and private equity transactions.