Nebraska waives sales tax penalties for remote sellers, sets firm compliance deadline

The Nebraska Department of Revenue is in a generous mood. Back in July 2018, it said it would require certain remote sellers to collect and remit sales tax starting January 1, 2019. Now the department says it will temporarily waive penalties and interest for the first quarter of 2019 for remote sellers and marketplaces that report and remit the sales tax due since April 1, 2019.

After the Supreme Court of the United States issued a decision that authorized states to tax remote sales (South Dakota v. Wayfair, Inc.), many states rushed to do so. Several state departments of Revenue were so eager they used the Wayfair decision to tax remote sales under existing statutes rather than wait for lawmakers to enact an economic nexus law. Nebraska was one such state.

According to the July 2018 Department of Revenue statement, the new collection obligation applied to remote sellers engaged in business under Neb. Rev. Stat. § 77-2701.13(1). However, the department also adopted a safe harbor provision, waiving the collection requirement for remote sellers with $100,000 or less in sales or fewer than 200 separate transactions in the state annually.

The department said at the time that it would not pursue retroactive remote sales tax collection prior to January 1, 2019.

In March 2019, Nebraska enacted a law (LB 284) that codified the department’s economic nexus policy and imposed a sales tax collection obligation on marketplace facilitators; it took effect April 1, 2019. The department enforced the marketplace provision starting April 1, but kept the January 1, 2019, enforcement date for economic nexus.

Last week, the department softened that position, acknowledging that “remote sellers and MMPs [marketplace providers] may have faced difficulty in timely complying with all of these laws.” Thus, it’s granting “a temporary penalty and interest waiver to remote sellers and MMPs that”

• Were not engaged in business prior to April 1, 2019;
• Met either the $100,000 sales or 200 transactions threshold during 2018 or 2019; and
• Have not yet complied with the requirements of LB 284

Businesses with a physical presence in Nebraska are not eligible for this relief.

This isn’t an entirely selfless act. In order to qualify for the penalty and interest waiver, eligible businesses must do the following by January 20, 2020:

• Obtain a sales tax permit (Form 20)
• Report and remit all sales and local sales tax due since April 1, 2019
• Submit a Request for Abatement of Penalty (Form 21)
• Submit a Request for Abatement of Interest (Form 21A)

This should serve as a warning to remote sellers and marketplaces currently not complying with Nebraska’s sales tax laws. The department intends to assess penalties and interest on remote sellers and marketplaces that fail to meet the deadline of January 20, 2020. Furthermore, those penalties will cover “all periods dating back to and including April 1, 2019.”

Some businesses have been taking a “wait-and-see” approach to states’ new sales tax collection requirements, playing the odds that they won’t actually be enforced. In this case, such businesses got lucky: The Nebraska Department of Revenue is giving them more time to comply and forgiving past debts.

But the line has now been drawn. The department has made it clear it won’t extend mercy to businesses that fail to comply by January 20, 2020. For sales tax compliance dawdlers, the time to get compliant in Nebraska is now.

Since Nebraska is a Streamlined Sales Tax (SST) member state, businesses can register through the Streamlined Sales Tax Registration System. Avalara, as an SST Certified Service Provider (CSP), can help with that process. 

Learn more about sales tax nexus laws in all states.