Wayfair Decision | TaxConnections

27 Jul 2023

Unravelling The Impact: How The Wayfair Case Sales Tax Legislation Has Shaped The Ecommerce Landscape

In e-commerce, where digital marketplaces transcend geographical boundaries, ongoing sales tax legislation in states across the country has emerged as a crucial factor for the success and sustainability of online businesses. With governments around the globe recognizing the immense economic potential of e-commerce, the introduction of sales tax regulations here in the US has become a pressing reality. In the wake of the Wayfair case, compliance with these legislative measures has now become paramount for e-commerce businesses, as failure to adhere to the evolving tax landscape can result in significant financial consequences and reputational damage.

In this article, we explore the intricate implications of sales tax legislation on e-commerce businesses, shedding light on the challenges they face and the strategies they adopt to ensure compliance in this complex regulatory environment.

Overview of Recent Sales Tax Legislation

The Wayfair decision and its impact on sales tax laws
The Wayfair decision, a 2018 landmark ruling by the US Supreme Court, transformed the landscape of sales tax legislation for ecommerce businesses. This decision enabled states to craft legislation that would enable them to enforce sales tax collection from out-of-state sellers based on economic nexus thresholds. The Wayfair decision overturned the previous physical presence requirement and paved the way for economic nexus laws that determine sales tax obligations based on sales volume or transaction thresholds.
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Written by Monika Miles | Posted in Wayfair Case • Wayfair Decision

05 Aug 2021

Is Wayfair Simplification On The Horizon?

If you’re a business owner, accountant or involved in the tax world in any way, you’ve undoubtedly been made aware of the Wayfair decision.

In short, that decision, which said that South Dakota’s economic nexus law was constitutional and opened the door for other states to do the same, effectively made it easier for companies to create nexus in a state for sales tax purposes, thus creating a collecting and filing responsibility.

Over three years later and every single state that has a general sales tax has implemented some form of Wayfair-related legislation, whether economic nexus or marketplace facilitation. However, because each state has the freedom to do so independently, tax rates and the triggers for these Wayfair laws vary wildly. For businesses, this lack of cohesion has created a tax burden that, for some, is nearly unbearable.

The Complication At The Heart Of Wayfair

Written by Monika Miles | Posted in Wayfair Decision

17 Jun 2021

Wayfair Decision Is Complicating More Than Just Online Sales Tax

It’s been nearly three years, but the Wayfair decision is still impacting businesses in unexpected ways.

For an in-depth overview of South Dakota v. Wayfair (2018) and its impact on states and retailers alike, please click here.

As a result of the decision in that case, almost every state with a general sales tax has implemented what many in the business refer to as ‘Wayfair laws.’ More specifically, economic nexus and marketplace facilitation legislation.

The speed at which these laws were implemented by states eager for additional sources of tax revenue meant that interactions between Wayfair legislation and other laws may not have been fully considered or understood at the time. Even now, as the last holdout states finally join the rest by implementing their own Wayfair laws, businesses are still feeling the effects in areas other than just online sales tax.

Written by Monika Miles | Posted in Sales Tax • Wayfair Decision

24 Jun 2020

Wayfair Two Years Later: What We Have Learned

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?
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Written by Monika Miles | Posted in Wayfair Decision

05 Feb 2020

3 Important Sales Tax Predictions To Watch For In 2020

The world of sales tax has changed a lot in the past year. Following the Supreme Court’s Wayfair decision, 2019 was the year most states began requiring businesses to collect and remit sales tax, and then began making marketplace facilitators (such as Amazon or eBay) responsible for collecting and remitting the taxes on sales that came through their marketplaces.

What changes can we expect to see this year? Keep reading for three predictions we believe are just around the corner.

3 Sales Tax Predictions For 2020
1. Smaller Retailers Will Depend On Marketplaces
As Greg Chapman, SVP of business development at Avalara explains, “We should expect traditional ecommerce providers to start working closely with marketplaces or offering more ‘Amazon-like’ experiences to stay relevant.”

The increase in online shopping coupled with confusing economic nexus laws make it even more appealing for very small businesses up to mid-sized companies to work with online marketplaces. In addition to facilitating sales in a process that’s more streamlined for customers, a lot of states have placed the burden of sales tax collection on the marketplace rather than the seller. This can greatly reduce the cost and risk of doing business online for companies struggling to navigate tricky taxability questions.
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Written by Monika Miles | Posted in Sales/Use Tax • Wayfair Decision

18 Dec 2019

What You Need To Know About The Wayfair Decision And How It Affected Sales Tax

Here we are, about 18 months after one of the biggest jolts to the sales tax landscape. On June 21, 2018, state sales tax completely changed when the U.S. Supreme Court established precedent for economic nexus through South Dakota v. Wayfair, Inc.

In the highly anticipated ruling, the Court ruled 5-4 in favor of overturning its 1992 Quill decision, which required sellers to have substantial physical presence before a state could enforce the sales tax collection responsibilities.

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 decisions 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.”

Written by Monika Miles | Posted in Sales Tax • Wayfair Decision

09 Aug 2019

US Supreme Court Wayfair Ruling Impacts Non-US Companies

A US Supreme Court ruling last year is expected to impact every company that sells goods or services into the US within months, or even weeks and days. In many places, it has already begun.

The ruling, South Dakota v. Wayfair, is considered precedent-setting because of its finding that US states may charge tax on purchases made to individuals and businesses within their borders by out-of-state sellers, even if these sellers don’t have a physical presence in the state.

(Wayfair is an NYSE-listed e-commerce company based in Boston, Massachusetts. Two other defendants in the case, Overstock.com Inc. and Newegg, Inc., are also US-based internet retailers.)

Until the Supreme Court’s decision, states had the authority to impose a sales tax collection obligation only on businesses that were physically present within their borders.

Written by Darlene Hart | Posted in U.S. Supreme Court Decision • Wayfair Decision

26 Jun 2019

Happy Anniversary – The South Dakota V. Wayfair Inc. Decision

It’s been just over a year since the U.S. Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc. on 6/21/18. This key ruling paved the way for states to enact economic nexus legislation and thereby more easily require companies to collect, remit and report sales tax. This decision quickly changed the sales tax world in a big way, particularly for on-line retailers, but also for many other companies.

The Supreme Court’s ruling in June 2018 overturned the Quill decision of 1992 which established physical presence for nexus standards. The Wayfair decision established the concept of economic nexus, but did not automatically make economic nexus the law of the land for all 50 states. The High Court’s decision was that South Dakota’s economic nexus law was constitutional. Since this ruling, most states have enacted some type of economic nexus legislation as it pertains to sales tax. As we describe in a previous blog, economic nexus is based upon the amount of sales or number of transactions in the state. If a certain threshold is met, nexus is deemed to be created. For instance, in South Dakota, economic nexus is created in if an out of state company makes sales of products or services into South Dakota in excess of $100,000 or has 200 or more transactions.

What have We Learned?

Written by Monika Miles | Posted in Wayfair Decision

18 Jun 2019

Internet Sales – The Wayfair Case

South Dakota v. Wayfair, Inc. – THE Case

On June 21, 2018, 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 the current 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.”

Written by Monika Miles | Posted in Wayfair Decision

09 May 2019

Wayfair And California – Yes, Indeed! (Part 2)

It has been almost a year since the U.S. Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc. (June 2018) , making it easier for states across the country to enact nexus triggering legislation, and ultimately leading to the collection of sales tax from companies doing business in various states.

The Supreme Court’s ruling in June 2018 did not automatically make economic nexus the law of the land for all 50 states. The Court ruled that South Dakota’s economic nexus law was constitutional. (The state had enacted legislation which stated that economic nexus is created in if an out of state company makes sales of products or services into South Dakota in excess of $100,000 or has 200 or more transactions in the state within a year.) However, since this ruling, over 35 states have enacted similar economic nexus legislation. As we describe in a recent blog, economic nexus is based upon the amount of sales or number of transactions in the state. If a certain threshold is met, nexus is deemed to be created.

Written by Kat Jennings | Posted in Wayfair Decision

24 Apr 2019

Four States With New Economic Nexus Legislation

Following last year’s Wayfair Supreme Court case, which set precedent for states to enact economic nexus provisions, legislatures across the country have defined and implemented new online sales tax laws.

Although many states quickly implemented economic nexus provisions and have already started collecting online sales tax, there are some that have decided to take a little bit of extra time.

Arkansas’ Online Sales Tax Legislation

Here are four states that recently passed online sales tax provisions. Keep reading for the details!

Quick Arkansas Highlights:

Passed? Yes
Effective date? July 1, 2019
Thresholds? 200 separate transactions or sales exceeding $100,000 of tangible personal property, taxable services, digital codes or specified digital products

Written by Kat Jennings | Posted in Nexus Legislation • Wayfair Decision

14 Mar 2019

The States Are Going Too Far With Wayfair: Commentary From A Recently Retired CPA

This Very Thoughtful Commentary Was Provided In Yesterday’s Post – We Want To Know What You Think!

“I continue to be greatly disturbed by what is occurring regarding this extremely complex and current economic issue. I understand fully that the US Supreme Court has given approval to the actions being undertaken by states all across this country through its decision concerning Wayfair. But, I believe that the states are going too far. I have dealt with states and sales tax audits and auditors for 50 years. Both in industry and in public accounting. I have represented clients as an expert witness in court cases.
I have said and written this before. I will say it to anyone that will listen. To require companies that have no tangible connection with a state that merely sell into a state on the internet to register then collect then remit then be audited then be assessed for any tax inadvertently not paid plus a penalty and interest for having nothing in the state for which the state provides services to the company is not right. It akin to the oppressed system that existed in England more than 100 years ago.

Written by TaxConnections Admin | Posted in Wayfair Decision