Are Kansas’ new remittance requirements legal?
Kansas’ liberal tax policy that triggers a sales tax duty with a single sale into the state has the Kansas Attorney General questioning the policy’s legality. Kansas began enforcing registration on all remote sellers as of October 1, 2019 (Notice 19-04). With this rule, Kansas became the toughest state on Wayfair laws in the nation.
Just prior to the effective date, Jared Walczak with the Tax Foundation reports that:
“…the Attorney General’s Office issued a nonbinding legal opinion concluding that the Department of Revenue’s decision to require remote sellers to collect and remit sales taxes to the state absent specific statutory authority and without implementing a safe harbor for small sellers was unconstitutional and invalid.”
The opinion states that the DOR has “legally insufficient basis to begin requiring collection and remittance of retail sales or compensating use taxes by out-of-state retailers with no physical presence in the State.” In return, the Department responded with confidence in its legal position and enforcement of the new remittance requirements.
Aggressive sales tax policy
Kansas’ scalding approach to online seller requirements dismisses the U.S. Supreme Court threshold standards set in Wayfair. (see Sell into Kansas and pay up, pronto!). Ecommerce businesses selling into Kansas carry the audit risk of registering and collecting.
Registering carries a cost and administrative burden. Not registering carries the risk of noncompliance. A tax adviser can help you negotiate the tough decision to register now or wait. Or, if decision time has passed and you’ve become non-compliant in any jurisdiction, help you negotiate penalty relief.
Let’s talk tax
Judy Vorndran can be reached at jvorndran@taxops.com.
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