Do you have a business that sells across State lines? Do you have a substantial number of transactions, or substantial gross receipts from such transactions, across State lines? Are you paying tax to the States and localities where your purchasers reside? These are among the questions businesses should be asking themselves after the Supreme Court’s 2018 decision in South Dakota v. Wayfair, Inc.
Wayfair increases State and local power to tax remote sellers.
In Wayfair, the Court overturned prior holdings that prohibited States from collecting sales tax from sellers lacking a physical presence in the State. After Wayfair, the question is not whether the seller has a physical presence in the State but whether it has a “substantial nexus” with the State. A “substantial nexus” can exist when a remote seller has substantial numbers of transactions with purchasers in a State or substantial receipts from such transactions. After Wayfair, many States have set transaction and/or gross-receipts thresholds to determine which out-of-State sellers must collect and remit sales and use tax.
Continue Reading Five Ways South Dakota v. Wayfair Affects Interstate Sellers