BISMARCK - More than 1,000 online retailers have registered with North Dakota's tax authorities since the U.S. Supreme Court opened the door for states to require out-of-state sellers to collect sales tax, Tax Commissioner Ryan Rauschenberger said Monday, Oct. 1.
Monday marked the deadline for remote sellers to register with the state and begin collecting its sales and use tax. Rauschenberger said more than 250 of the country's top 1,000 online sellers have registered with the state - some were already signed up because they had a physical presence in the state - and his office will follow up with the remaining businesses to make sure they're in compliance.
"They're not just dealing with us ... they're dealing with potentially the more complicated states where they have more sales," Rauschenberger said. He said the state has enforcement options, such as the courts, but his office is working with online companies on a "case-by-case" basis for now.
State officials are expecting a boost in revenue from the new requirements. Rauschenberger, a Republican, said the forecast released by the Office of Management and Budget last month included $25 million from online sales taxes in the 2019-21 biennium, a fraction of the expected $1.9 billion in total sales and use tax.
The Supreme Court's June ruling was hailed as a victory for brick-and-mortar businesses that have faced competition from online sellers in recent years. One top North Dakota Republican lawmaker said earlier this year it was "all about fairness."
Mike Rud, president of the North Dakota Retail Association, welcomed the ruling but said it remained unclear how it would affect tax collections and shopping habits. He noted Monday's deadline came just ahead of the busy holiday shopping season, a critical period for retailers.
"It's going to take some time to see just what the impact of this is going to be," Rud said. "To say there's going to be an immediate impact from all of this and to give you an exact dollar amount of what we're anticipating, I don't think anybody can do that."
But Paul Rafelson, executive director of the Online Merchants Guild, a trade association, warned that states are imposing heavy compliance costs on businesses. He teased coming legal action seeking to lift the burden.
"People all over the country are making a living that they wouldn't normally be able to make," Rafelson said. "The states are really hurting small businesses."
The Supreme Court decision overruled a 1992 ruling, Quill Corp. v. North Dakota, which said the state couldn't compel the mail-order catalog business to collect sales tax. It also made effective a new law North Dakota legislators passed last year requiring out-of-state sellers to remit sales tax.
The new law includes an exception for smaller businesses, meaning only remote sellers that make at least 200 transactions or $100,000 in sales per year in North Dakota will be required to collect and remit sales tax.
Democratic Sen. Heidi Heitkamp was the state's tax commissioner when the Quill case went to the country's highest court. In a statement issued last week, she said it's "great news for our state to finally see the issue resolved in a way that will make small businesses more competitive and boost state revenue, which benefits every community."