In a rather monumental decision, the U.S. Supreme Court case of South Dakota vs. Wayfair, Inc. overturned the Quill case, stating that a physical presence is no longer required to establish substantial nexus in the collection of sales and use tax.
The Court held that physical presence was not necessary to establish nexus with the taxing state, that it created market distortions, and that it imposed an arbitrary, formalistic conflict.
In overwhelming consensus, experts believe that all indicators are showing that this decision will hold up. What does this mean for businesses?
For now, businesses should consider the quantity of sales into states in which they do not have physical presence. As the states react to the Wayfair decision, knowing the actual sales in each state will be beneficial in interpreting a business’ need to collect and remit sales tax on a state by state basis.
K·Coe Isom will be monitoring the forward momentum of individual states and Congress following this decision, and will provide ideas on how to be proactive with these changes.
Contact a K·Coe Isom tax advisor specialized in state tax issues and changes to assess your business’ considerations.