The Supreme Court of the United States’ decision in Wayfair, in June 2018, changed the landscape for sales and use taxes nexus for on-line retailers and remote sellers. Due to budgetary deficits the states are facing due to the downturn in the economy and the Covid-19 Pandemic, states will increase audit activity to raise money. Companies must be prepared and be proactive in order to avoid or reduce any state tax assessments.
The Wayfair decision lowered the bar in which a company has nexus with a state. Prior to Wayfair, a company needed a physical presence in the state to be required to collect and remit sales and use taxes. After Wayfair, states now require an economic presence, generally based on a threshold of sales into the state to create nexus with the state. Please note, even if a company does not meet the economic thresholds for sales or transactions, as the case may be, but has a physical presence in the state, then the company has nexus with the state because of the physical presence and must register for sales and use taxes in such state.
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