Supreme Court Decision Offers Support and Caution to ELFA Members

ELFA members have a stake in the U.S. Supreme Court decision in South Dakota v. Wayfair that determined businesses without a physical presence in a state may be forced to collect sales tax. Although commonly associated with online sales, the Streamlined Sales Tax Agreement guiding sales tax collection and adopted by 24 states thus far is the document in which ELFA negotiated definitions focused on equipment leasing. ELFA is working with the National Conference of State Legislatures (NCSL) in an endeavor to protect these definitions and rules in light of the Supreme Court decision. NCSL has recommended the remaining sales tax states consider postponing collection by remote sellers until Jan. 1, 2019, to properly lay the foundation of these rules to level the playing field for all businesses that sell or lease.

20 years ago Dennis Brown, former ELFA of VP of State Government Relations (left) and Maureen Riehl, former VP of the National Retail Federation, joined state legislators led by Neal Osten, National Conference of State Legislatures, in launching the Streamlined Sales Tax efforts, now coordinating with ELFA VP Scott Riehl (far right).

The readymade solution is states allowing all sellers to register to collect sales tax via the computerized Streamlined system at no charge to the seller, rather than through individual, state-by-state registrations. Additional recommendations are implementing liability protections for sellers that use Certified Software Providers, as well as providing publicly available taxability and exemption tables that can be downloaded in an easily usable format and accessed electronically. These tables should indicate the taxability of products and services along with any product and service exemptions and should be regularly updated. Also, a rates and boundary database should be available in an easily downloadable format and should be regularly updated.

ELFA has engaged in drafting and enforcement of the interstate Streamlined Sales Tax Agreement since the process began 18 years ago. At the outset the equipment leasing and finance industry was excluded from providing input. ELFA forcefully entered these deliberations and hammered out a multi-faceted definition of lease or rental. ELFA successes in years of negotiations resulted in 24 states adopting the Uniform Lease Definition and Lease Sourcing rule covering equipment and transportation property. Additional information including a list of the 24 states within the agreement can be found at www.streamlinedsalestax.org.