The Supreme Court of the United States recently ruled on a sales
tax case - South Dakota vs Wayfair, Inc.
The Supreme Court ruled in favor of South Dakota allowing them to
collect sales tax on out of state transactions even when the seller has no
physical presence in the state. In the
past if a company did not have a physical presence in the state than it was not
required to collect sales tax for that state.
With this ruling that will no longer be a guideline. Your economic
presence will now be the indicator. If
you sell in a state than you must collect sales tax for that state if you meet
the collection/filing thresholds. This
will have a large impact on businesses doing online sales as well as interstate
sales. The South Dakota ruling now says that if you have 200 sales
transactions in the state of South Dakota regardless of the dollar amount of
each transaction or $100,000 in sales per year than you have to collect and
remit sales tax to the state. There are
21 other states that have similar rules in their doctrine and they were just
waiting on the ruling of this court case to start enforcing them. This has huge implications for ALL businesses that sell to
other states. You will be required to
know the rules for collection and keep track of the limits and know when you
have met them and would be responsible for the collection of sales tax. This is just a brief overview of the changes coming to Sales
Tax. Feel free to give our office a call
for more information.
By Christine A. Murphy
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