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Wayfair Taxes and Local Impacts

November 22, 2021
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WRITTEN BY Eleni Bickell

Executive Summary 

Laws that require retailers to have a physical presence in the state as a requirement to collect and remit sales taxes were passed in the 1960s. Remote sales tax collection laws, or Wayfair Laws, refer to the ability of individual states to collect taxes from out-of-state online/remote retailers and does not require a business to be physically present in a state before sales are taxed. Wayfair Laws have been enacted in 29 states and the District of Columbia. In 2021, SB153  was enacted, permitting Missouri and local jurisdictions to collect remote sales taxes effective January 2023.  

Highlights

  • Missouri is the only state with a general sales tax and does not require remote retailers to collect tax.
  • According to the 2018 State Tax Actions report, states that enacted tax changes requiring collection on remote sales had revenues increase, ranging from about $7 million to $190 million for fiscal year 2019.
  • Missouri has a complex local tax system and relies on localities for sales tax revenue collections.

Limitations

  • There are no specific provisions facilitating compliance for small businesses that conduct online or remote sales.
  • Because each Wayfair Law varies between states, best practice for collecting sales tax revenue on online purchases remains unknown.
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