The U.S. Supreme Court’s decision in South Dakota v. Wayfair will allow states to mandate a sales tax for items purchased online from out-of-state sellers.
On June 21, 2018, the U.S. Supreme Court issued its opinion on South Dakota v. Wayfair. This case is a landmark nexus (sufficient physical presence) case for sales and use tax that will have implications for many online sellers and multi-state businesses.
In a 5-4 decision, the Court ruled that a state could require an out-of-state-seller to collect sales or use tax on sales to customers in that state, even though the seller lacks an in-state physical presence.
The Wayfair decision affects companies doing business in thousands of state and local tax-collecting jurisdictions across the country. The immediate impact will be on sellers with a significant virtual or economic presence in a state that asserts economic nexus.
Sellers delivering taxable products or services into a state with economic nexus will need to determine if they surpassed the dollar amount or transaction volume threshold for establishing nexus with that state. Sellers should be prepared for states to adopt and aggressively enforce expanded nexus provisions.
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