Archive for State Sales Tax

Sales Tax Confusion: What You Need To Know Now

Gray Areas In State Sales Tax: What You Need To Know Now

Tax legislation can be difficult to understand. It is not black and white; individuals sometimes interpret the same law in different ways. While most people can agree on the basics of sales tax laws , there are plenty of gray areas as the laws get more specific, especially if you are new to multistate sales tax compliance. In this blog article, we look at two areas of sales tax that often cause confusion: the taxation of digital products and services.

Digital Products & Sales Tax Confusion

SaaS and sales tax may at first seem like a straightforward area of taxation, but if you have kept up on our other blog articles linked here and here, you know it can get confusing quickly.

For example, we worked with a client who developed a product on a platform they charge a subscription for, so it sounds like it would fit into a SaaS category. But given the way their customers interact with the product, it also could be categorized as an information service.

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The Progressive, Creditable Implied Purchases Tax

A MODEST, SELF-HELP PROPOSAL ENABLING INDIVIDUAL STATES TO ADDRESS THE REMOTE SELLER TAX PROBLEM AND MUCH MORE

As the States’ and any Congressional responses to the United States Supreme Court’s 5-4 ruling in the remote seller sales tax enforcement case of South Dakota v. Wayfair, Inc., et al, 585 U.S.___ (2018) begin to emerge, this is to describe a simple proposal by which any individual state can effectively enforce its use tax on remote sales, mitigate the related compliance concerns of remote sellers AND enable its pursuit of other major state tax policy objectives. Read More

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U.S. Supreme Court: Goodbye Quill – Hello Wayfair

So, what’s new in state sales tax?  As of 6/21/18 – EVERYTHING!!

In a  highly anticipated ruling, the U.S. Supreme Court ruled 5-4 in favor of overturning its 1992 decision in Quill, which set a standard requiring substantial physical presence before a state could enforce the sales tax collection responsibilities on a seller.  In today’s case, South Dakota v. Wayfair, Inc., writing for the Court’s majority, Justice Anthony Kennedy indicated “…the Court concludes that the physical presence rule of Quill is unsound and incorrect.  The Court’s decision in Quill Corp v. North Dakota, 504 U.S. 298 (1992), and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), should be, and now are, overruled.”

What does this mean?  The short answer is that companies will now need to consider not only whether they have physical presence (or “boots on the ground”) nexus in a given state, but also whether their sales activity in a state exceeds certain “economic nexus” thresholds (such as the South Dakota threshold of $100,000 of sales or 200 annual transactions).  If so, they will need to register with the state and collect and remit sales taxes.  Note that the ruling only addresses the South Dakota legislation, which also was not retroactive.

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