It’s hard to believe that it has been two years since the landmark decision in South Dakota v. Wayfair (2018) that changed the sales tax landscape. The high court’s decision on June 21, 2018 was that South Dakota’s economic nexus law was constitutional and that the state could require companies who met certain sales thresholds to collect and remit sales tax on sales to South Dakota customers, even if the company had no physical presence. The decision effectively changed the way states define nexus for sales tax purposes.
The Supreme Court’s ruling did not automatically make this the law of the land for all 50 states. It was a South Dakota case, so the ruling just applied to South Dakota. However, in the last two years, states have been jumping on the economic nexus bandwagon and enacting laws similar to those of South Dakota. States have long been searching for new ways to bring revenue into their state and the Wayfair case gave them a long-awaited opportunity to do so.
What is Economic Nexus?