Memorandum

City of Lawrence

Finance

 

TO:

Tom Markus, City Manager

FROM:

Cc:

Bryan Kidney, Finance Director

Casey Toomay, Assistant City Manager

Danielle Buschkoetter, Strategic Projects Manager

Jennifer Werth, Senior Accountant

DATE:

6/26/2018

RE:

Impact to Lawrence for Supreme Court Sales Tax case

 

It is difficult to estimate the increase the City will be receiving from any future sales tax legislation for several somewhat complicated reasons as follows.

 

Kansas was part of the original Multistate Streamlined Sales and Use tax Agreement (SSUTA). There currently are 24 states that are part of the agreement. This means that a sale in any of those other 23 states may already be collecting to Kansas sales taxes if the state is registered in Kansas.

 

In addition to those states, many large companies like Amazon.com voluntarily collect sales taxes based on the location of delivery and we receive the receipt in the form of use taxes. However, there are certainly many other businesses that are delivering to Kansas customers and therefore would increase the City’s use tax.

 

The Supreme Court case clears the way for the state of Kansas to pass legislation that mirrors the South Dakota legislation. That legislation only required taxes for those retailers delivering to South Dakota if they have over 200 transactions and over $100,000.

 

In order for us to see an increase in sales taxes due to this ruling, I believe Kansas would first need to pass legislation similar to the South Dakota legislation. We should then see increase receipts from:

 

 

Due to the legislation needed to take advantage of the Supreme Court decision I would not anticipate that the City would see any significant increase in taxes in the 2019 budget. Here are potential increases in sales taxes if/when legislation is passed: