Potential Sales Tax Changes

On June 21, 2018, The U.S. Supreme Court handed down its anticipated decision in South Dakota v. Wayfair, No. 17-494. The case challenges South Dakota’s application of its sales tax to internet retailers who sell into South Dakota but have no property or employees in the state. At issue is the case Quill Corp. v. North Dakota from 1992, which set the property or employees standard for sales taxes using the Court’s (debated) dormant commerce clause power to restrict state taxation of interstate commerce.

Drumroll…South Dakota won. The Court laid out why South Dakota’s law is no burden to interstate commerce but made clear that more complex or overreaching laws would be. 31 states currently have laws taxing internet sales. Today’s decision will certainly change how states look at these laws but we may see states trying to see if their versions could survive even if they are less simplified and direct than South Dakota’s law.  So what does this mean to your business?

If your business sells product to other states, whether online or not, you will need to determine how that state taxes sales from other states.  You will need to know if your sales to other states exceeds the specific economic sales or activity thresholds.  Do you need help with sales taxes?  Please contact us.  We can help insure that your business complies with all sales tax laws.