In January of 2018, the United States Supreme Court agreed to hear a landmark case for the e-commerce age; South Dakota v. Wayfair, Inc.
The case was argued on April 17th in 2018, and a decision was reached by the court on June 21st, 2018. The decision was as follows, “A state may require sellers with no physical presence in the state to collect and remit sales tax for goods sold within the state.” (Oyez, 2019). This was an overruling of two previous landmark cases, Quill Corp. v. North Dakota and National Bellas Hess, Inc. v. Department of Revenue of Illinois, which required a physical presence for a state to collect taxes.
This entire case is based around the concept of tax nexus, which is the amount of communication that must occur between said business and the jurisdiction before the business can be required to pay a sales tax. Sales taxes (or sales-and-use-taxes) are typically picked up by the consumer or buyer of the product. However, states with sales-and-use-taxes can have very specific laws surrounding the payer of the taxes, should the sales tax payment not be fulfilled.
What does this mean for your business?
If you are selling or doing any kind of business outside of your state, get in contact with your tax advisor and accountants. With this decision having been made, there are more audits than ever, and your business may not even be aware of the taxes that were left unpaid. In order to protect your business, your employees, and yourself, contact your tax advisor (or accountant), and asked them how South Dakota v. Wayfair affects you.
“Responsible person rules in the wake of Wayfair” Journal of Accountancy, https://www.journalofaccountancy.com/issues/2019/nov/sales-tax-responsible-person-rules.html. Accessed 7 Nov. 2019.
“South Dakota v. Wayfair, Inc.” Oyez, www.oyez.org/cases/2017/17-494. Accessed 7 Nov. 2019.