Where Do I Charge Sales Tax?
A landmark court case South Dakota v. Wayfair overturned the 1992 ruling for Quill Corp. v. North Dakota this week, negating the long-held standard for establishing nexus through physical presence. What does this mean for your business?
If you are a business that sells a substantial amount of product into a state, you may have created a requirement to charge and remit sales tax in that state, without ever having stepped foot across the state line.
South Dakota contends that making 200 separate transactions into the state, or earning gross revenue of $100,000 from sales within the state creates substantial nexus to make a business liable for charging and remitting sales tax to the state. The emergence of internet sales over the past 2 decades has changed commerce in such a way that the Supreme Court agrees that the physical presence test is now irrelevant to the ability to create a market.
Many states have already passed similar provisions which were intentionally scheduled to go into effect over the coming months or immediately pending this decision from the Supreme Court. At this stage, each state is able set its own standard for establishing economic nexus, which will complicate the ability for any business to know in which markets they have additional compliance requirements.
State Tax Advisors is a team of multi-state tax consultants. We are available to assist you with any questions you may have, nexus analysis, registrations, tax filings and other compliance issues. Contact us for a consultation to find out specifically how the changes in our tax environment will affect your business.