Following the Supreme Court’s South Dakota v Wayfair decision, nearly all states have used their legislative authority to protect small sellers from expansive sales taxation. However, Kansas is the only state that not only has no small-seller exemption to sales tax rules. What’s worse, Gov. Laura Kelly’s Department of Revenue issued a constitutionally suspect order that has Kansas in a unique position among the 50 states. Unless lawmakers act, Kansas will place an undue burden on Kansas consumers and commerce and risk taxpayer dollars to expensive litigation.
Working with the National Taxpayers Union Foundation, the Kansas Policy Institute put together a policy brief explaining the need for legislative action on sales tax reform. We start by outlining the changing legal national landscape that called for reform. Then we detail Kansas’ unwise path to economic nexus, highlighting state agency’s action to require sales tax action through fiat. Such unilateral action taken by a state agency not only places an undue burden on small sellers doing business in the state but also invites legal challenges paid for at the taxpayer’s expense.
The Kansas legislature needs to pass a safe harbor for small sellers that conform with Wayfair and keeps the state out of court. Doing so would place the state in line with the rest of the country while signaling an intent to protect small businesses.