Wayfair Implications for State and Local Tax

[Webinar Series] Wayfair Implications for State and International Tax Excerpted from the webinar series produced by the University of Texas at Arlington on financial reporting and governance. Tram Le , CPA, JD, and LL.M. and Associate Professor at the University of Texas at Arlington, where she’ll be returning this fall to teach graduate students state and local tax next. Tram was a guest for the Corporate Education Webinar Series, where she spoke with Bill Seeger, PhD, Clinical Professor of Economics. The series talks about tax from every angle, starting with Tram’s expertise, the topic of state and local tax. Click below to hear the interview. Bill: So Tram, what is this Wayfair thing–give us the context and some understanding as to why it is important? Tram: States have had the power and authority to impose taxes ever since the Constitution was adopted in 1789. Taxes include consumption taxes, income taxes and property taxes, which are your three big buckets. States have the power to generate revenue and they are looking to those sources to generate the money that they need to provide you services and the infrastructure we all enjoy. Most state and local governments heavily relied upon property taxes until property taxes were not long enough. In the early 1900s, states needed new and better way to generate the type of revenue needed to support services. This lead to states beginning to impose income taxes. The state of Wisconsin actually imposed an income type of tax back in 1911, so at a little over a hundred years old now. States expanded the tax duty to motor vehicle gasoline, liquor, tobacco, and other items quickly, then the Great Depression hit, which prompted states to adopt sales tax. Sales tax now accounts for about 30 percent of a state’s revenue. Wayfair overturned Quill, a 20-something year old law, and turned the sales tax landscape on its head. With the decision, the long-standing physical presence still stands when assessing whether a taxpayer has nexus. But, Wayfair introduced economic nexus as an expansion of tax duties to remote sellers. For taxpayers, especially mom and pop shops, tax generally is not a front-of-mind topic and now they are forced to navigate around these new laws. Wayfair is why we are here today on this webinarr. Click below for your Wayfair update. Reach out to Tram with business tax related questions at tle@taxops.com. Continue the interview on YouTube.

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