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Kansas Tax Authority Asserts Jurisdiction over Internet Sales
The State of Kansas has recently issued assessments to Cabela’s, a Nevada based retailer of outdoor goods, for almost $400,000.00 relating to unpaid sales taxes and penalties relating to transactions with Kansas-based customers. While the retailer does have stores in Kansas, all the sales in dispute were made either online or through catalogues by a related corporation without any physical presence in the jurisdiction.
In what will likely be an important case about states’ jurisdiction to levy taxes, Cabela’s has challenged the assessments on a number of grounds. One of the taxpayer’s arguments is that the companies involved in the transactions do not have a “nexus” with Kansas; this argument has a good chance of success as the US Supreme Court held in Quill v. North Dakota, 504 U.S. 298 (1992), if a business does not have a physical presence in a particular state, it is not required to collect sales tax for sales from customers in that state. The important question will be whether acting through a related company without a physical presence in a state is enough to avoid taxation.
For additional information, visit:
http://www.ohio.com/mld/ohio/business/17198601.htm