Supreme Court Decision Allows States to Collect Sales Tax for Online Sales

June 28, 2018

The United States Supreme Court, in a 5-4 decision on June 21, overturned the Quill Corp. vs. North Dakota case, which prohibited states from charging sales tax unless the business had a physical presence in the state. The South Dakota vs. Wayfair decision clears the way for states like Iowa to begin collecting this otherwise lost revenue and to make sales tax on internet sales more like that for brick and mortar stores.

The Iowa tax reform package that passed during the 2018 legislative session, SF 2417, includes provisions that anticipated this outcome and will now allow the collection of online sales tax in Iowa. The parts of the tax reform bill that expand Iowa sales tax collection to marketplaces and remote sellers take effect on January 1, 2019. The law allows an exception for small sellers.

Past editions of the newsletter focused on certain aspects of the tax legislation. Most pieces of the legislation that affect business will not take effect until 2019 at the earliest. The Iowa Department of Revenue has released a bulletin regarding the effects of the court case and the bill. You can find it here.