Sales Tax News - September 11, 2017

Oklahoma Supreme Court Upholds Removal of Vehicle Sales Tax Exemption

In a 5-4 ruling, the Oklahoma Supreme Court ruled that the state’s vehicle sales tax is constitutional.  The law, which was modified May of this year, imposes a 1.25% sales tax on motor vehicle sales.  Auto sales had previously been exempt from sales tax.  Two lawsuits were filed challenging the sales tax.  The suits argued that the new bill was a "revenue bill" and that the state did not meet the standards required by Question 640.  In 1992 voters approved Question 640, putting heavy restrictions on how the state could increase taxes.  But the court ruled that taxes were not being raised.  Instead, an exemption was being removed for taxes that already existed.  The ruling stated that a bill removing an exemption has never been classified as a revenue bill and to rule this bill as such would be setting new precedence.  Democratic State Representative Scott Inman is disappointed in the ruling, “Today's court ruling presents a mixed bag for Oklahoma voters.  While avoiding another loss of $100 million to the current year's budget, the ruling has empowered this Republican majority to raise the taxes of middle class families without honoring the will of the Oklahoma citizens who passed State Question 640 in 1992."

Indiana Files Lawsuit to Collect Sales Tax for Online Sales

Indiana Attorney General Curtis Hill has filed a lawsuit in hopes that a court will find House Enrolled Act 1129 constitutional.  The law requires out-of-state businesses to collect and remit sales tax the same way businesses based within Indiana would.  The state argues that it is losing significant revenue to online sales.  Estimates show that the state lost over $77 million in 2012 and that number has only increased since.  The lawsuit, which was filed against online retailers Overstock.com and Wayfair, aims to overturn a 1992 Supreme Court Ruling that states that out-of-state retailers do not have to collect and remit sales tax.  Governor Eric Holcomb believes it is time for the Supreme Court to revisit its ruling, “In light of the rapid evolution and capabilities of software and technology, the incredible growth of online sales in recent years and other factors, it’s time for the Supreme Court to revisit and overturn this ruling”.