On Wednesday a U.S. Supreme Court decision reversed a 1992 precedent that said businesses were only required to pay sales tax if they had a physical presence in the state. It was welcome news for Oklahoma, which has been trying for years to force online companies to pay sales tax., which made up 31 percent of state revenue in 2017.
Oklahoma’s sales tax statute is broad according to Joe Crosby, the CEO of Multistate, a lobbying firm that works in all 50 states.
“It basically says if you’re making sales into the state you're required to collect tax,” Crosby said.
The statute’s simplicity makes it easier for Oklahoma’s Tax Commission to make the case that online companies have to pay sales tax, but it still takes a concerted effort according to spokesperson Paula Ross.
“The last several years we've sent like top 500 Internet retailers a letter explaining what the requirements were in Oklahoma, and we had pretty good success from that,” Ross said.
In recent years, Oklahoma also passed laws explicitly requiring online businesses to pay sales tax, like the Retail Protection Act of 2016 and April’s so-called “Amazon tax.”
Still, the 1992 precedent made it easy for companies to skirt state law. Crosby says the Supreme Court’s ruling will change that.
“If I'm a remote seller before this decision the fact that Oklahoma has a statute doesn't mean I have to do anything, because Oklahoma statute, under the supremacy clause of course, does not trump the Supreme Court's determination,” Crosby said.
The court’s ruling makes Oklahoma’s law consistent with federal law, giving new authority to the Tax Commission when it enforces sales tax statute.
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