We’re hosting a special webinar next week with our partners at Avalara. The South Dakota v. Wayfair, Inc. Supreme Court ruling includes the biggest internet sales tax changes since 1992 and the impacts are being felt by businesses all over the United States.
South Dakota v. Wayfair, Inc.
The decision effectively overturned a longstanding physical presence rule (Quill Corp. v. North Dakota) for determining when a state can make remote sellers collect sales tax. These changes are currently in effect and some businesses are having to pay sales tax as far back as Q1 2018.
What: George Padilha of Avalara discusses the implications for businesses across the US under these new rules and how to determine where your business holds economic nexus.
Don’t miss this essential webinar for any business conducting sales across state lines.
When: Oct 30, 2018, 2:30 PM Eastern Time (US and Canada)
After registering, you will receive a confirmation email containing information about joining the webinar.
South Dakota v. Wayfair, Inc. Webinar Recording
To Learn More About The Landmark Decision And Associated Tax Changes, Click Here.
Experts in all things revolving around tax compliance, Avalara makes tax compliance easy and efficiently, enabling you to do what you do best without constantly worrying about rate changes or filing deadlines.
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The South Dakota v. Wayfair, Inc. Supreme Court ruling has a significant impact on businesses all over the United States. The decision effectively overturned a longstanding physical presence rule (Quill Corp. v. North Dakota) for determining when a state can make remote sellers collect sales tax.
South Dakota v. Wayfair, Inc. will have far reaching implications for businesses operating remotely throughout the United States.
In short, sales tax makes up more than 40% of South Dakota’s revenue. The Supreme Court judged it to be unfair that e-commerce and remote sales should be able to avoid sales tax that can generate as much as $14bn for states annually.
The aim of the ruling is to level the playing field between non-collecting e-commerce and remote sellers and brick-and-mortar businesses.
Overturning Quill Corp. v. North Dakota
The decision of this 1992 ruling effectively prevented states from collecting any sales tax from retail purchases made over the Internet or other e-Commerce routes, unless the seller had a physical presence in the state. Due to the rapid expansion and increased prevalence of e-commerce and remote sellers, the decision to exempt these businesses from paying sales tax no longer made sense and worked to the detriment of states in which those businesses conduct sales.
“Because the physical presence of Quill is unsound and incorrect, Quill Corp. v. North Dakota, 504 U.S. 298, and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, are overturned.” SOUTH DAKOTA VS. WAYFAIR, INC., ET AL. NO. 17-494. ARGUED APRIL 17, 2018 – DECIDED JUNE 21, 2018
Who Is Affected By The South Dakota v. Wayfair, Inc. Ruling
The recent decision directly affects several nationwide sellers. In particular, the decision affects remote sellers not currently registered with the state who meet threshold requirements. Those threshold requirements are:
Annual sales in excess of $100,000 or 200 transactions into South Dakota
The ruling does not affect any business already registered and collecting sales tax in South Dakota. Those businesses will be grandfathered in under the new ruling.
It is important to understand that this ruling applies to both online and offline sales. Anyone conducting cross-border sales with South Dakota is bound by the new ruling.
The ruling does not change what is or is not taxable, either. Rather, it is establishing that a physical presence is no longer the criteria by which the state decides who collects sales tax. Services, not just tangible goods and personal property, fall under the new rule. This ruling will apply to manufacturers and wholesalers who sell direct to consumers, too.
South Dakota v. Wayfair, Inc. Setting Precedent and Economic Nexus
To begin, understanding the definition of economic nexus will help businesses realize what this ruling does in terms of setting precedent for other states that choose to implement the same requirements.
Infographic provided by tax compliance experts, Avalara.
Economic Nexus is a tax collection obligation imposed on sellers based on their level of economic activity within a state. Unlike physical presence, it is based entirely on sales revenue, transaction volume, or both.
These rules vary from state to state. With the recent ruling setting a threshold in South Dakota, it will likely lead other states to utilize the precedent and use the same threshold at a minimum.
What You Can Do
First, don’t panic. Contact your SALT CPA or attorney tax advisor and seek counsel on all nexus related requirements and law. If you don’t have one, our partners at Avalara are among the best when it comes to tax compliance and they have an extensive directory of tax experts and SALT CPAs who are able to work with you to get things in order.
You can leverage Avalara Tax Advisory Services (TAS) to:
Determine where you have nexus
Get ongoing monitoring services to see when new nexus is established
Register in new jurisdictions
Navigate tasks related to establishing new nexus
For an easy reference, download this 2018 Mid-Year Sales Tax Changes whitepaper from Avalara. Inside, you’ll find many details surrounding recent tax changes that could directly affect your business as well as how you can address the best approach to resolve any identified issues.
Experts in all things revolving around tax compliance Avalara makes tax compliance easy and efficiently, enabling you to do what you do best without constantly worrying about rate changes or filing deadlines.