If you are selling goods or products online and some of your customers are located in Wyoming, you need to be aware of the state’s Internet sales tax rules. Keep in mind that collection of sales tax on Internet sales has been a matter of ongoing debate both at the state and federal level.
The General Rule: Physical Presence in the State
The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a physical presence. The physical presence rule is based on a 1992 United States Supreme Court decision, Quill Corp. v. North Dakota, that addressed the obligations of mail order businesses to collect sales tax on out-of-state sales. The decision has been extended to include online retailers. Generally speaking, physical presence means having:
The corollary to the physical presence rule is that, if you do not have a physical presence in the state, you generally are not required to collect sales tax for an Internet-based sale to someone in that state.
Examples of Physical Presence
Example 1: You are an online retailer located in Wheeling, West Virginia and make a sale through your website to a customer in Rock Springs, Wyoming—a state where your business has no physical presence: You are not required to collect sales tax from the Rock Springs customer.
Example 2: You are an online retailer located in Laramie, Wyoming and make a sale through your website to a customer in Gillette, Wyoming: You are required to collect sales tax from the Gillette customer.
Example 3: After several years of operating solely out of a warehouse in Wheeling, West Virginia, you open a one-room satellite office just outside of Cheyenne, Wyoming—a state where previously you had no physical presence. A day later, you make a sale through your website to a customer in Casper, Wyoming: You are required to collect sales tax from the Casper customer.
You can find limited, if somewhat ambiguous, guidance on how physical presence is defined specifically under Wyoming law by consulting Section 39-16-101 (a)(x) of the Wyoming Statutes (W.S.), which defines the term vendor. (Both the complete Wyoming sales tax statute and the complete Wyoming use tax statute are available online in their entirety from the state.) The definition includes having or maintaining a place of business in the state directly or by any subsidiary. It also includes engaging “in regular or systematic solicitation by three or more separate transmittances of an advertisement or advertisements in any twelve month period” in the state “by the distribution of catalogs, periodicals, advertising flyers, or other advertising, or by means of print, radio, television or other electronic media” or by various other means detailed in the statute.
Under Wyoming law, some items may be exempt from sales tax, and certain purchasers may not be required to pay sales tax. For example, most food for home consumption is exempt from sales tax. (Further information on this food exemption is available in a DOR bulletin.) For relatively complete information on exemptions, consult generally the various subsections of W.S. 39-15-105.
You might also consider reviewing Section 9 of Chapter 2 of the DOR’s administrative rules (Chapter 2 covers sales and use taxes). The current version of Chapter 2 is apparently only available as a scanned document from the Wyoming Secretary of State’s Office. You can the information using the state government’s online rules search system.
The Customer’s Responsibility: Use Tax
In cases where the online retailer does not have to collect sales tax, it is the customer’s responsibility to pay the tax—in which case it is known as a use tax. A Wyoming Department of Revenue (DOR) FAQ page on both sales and use taxes presents the question “Are my catalog purchases subject to the use tax?” and, as part of the answer, states, “Usually. Catalog and other companies not physically located in Wyoming cannot be required to collect sales or use tax on their sales to Wyoming customers.” Keep in mind that, under federal case law, Internet purchases are generally analogous to catalog purchases.
A DOR publication, Use Tax and You, addresses what purchases qualify for use tax. The publication states that “The purchase could have occurred from a visit to a bordering state, a mail order, or an internet purchase where the item was delivered or received by the purchaser in Wyoming or brought into the state by the purchaser.”
The DOR also publishes a Vendor Manual that briefly explains use tax in Wyoming. The Manual mentions that, “Use tax is complementary to the sales tax and is applied to out-of-state purchases. Use tax helps to place Wyoming merchants on an equal footing with out-of-state vendors who are not required to collect Wyoming’s sales tax.”
Proposed Federal Legislation
At the federal level Congress has repeatedly considered legislation that would affect large Internet retailers and how online sales taxes are collected in all states. The most recent form of a proposed federal law is the Marketplace Fairness Act of 2015. As in previous versions, the 2015 Act would allow states to require sellers not physically located in their state to collect taxes on online and catalog sales made to people in their state. Sellers that make $1 million or less in annual sales and have no physical presence in the state would be exempt from this requirement. States would have to meet certain criteria to simplify their sales tax laws and make sales tax collection easier before they could require sellers to collect the tax.
In Wyoming, the physical presence rule applies for Internet retailers. However, because the issue has been contentious in many places around the country, you should consider checking in periodically with the Wyoming Department of Revenue to see if the rules have changed.
Updated: April 14, 2016