For those businesses utilizing e-commerce to sell products and services, the recent decision of the United States Supreme Court in South Dakota v. Wayfair will lead to increased sales tax compliance requirements and complexity. The Supreme Court overruled its 1992 decision of Quill Corp. v North Dakota which prohibited states from imposing upon a seller the responsibility to collect sales tax for sales within a state when the seller lacked a physical presence within the state. The Supreme Court held constitutional South Dakota’s law that required a seller with no physical presence in the state to collect and remit South Dakota sales tax if either –
- The seller’s annual gross revenue of sales of tangible property, any products transferred electronically, or services delivered into South Dakota exceed $100,000; or
- The seller has 200 or more separate transactions of tangible property, any products transferred electronically, or services delivered into South Dakota per year.
Although the Supreme Court remanded the case for further proceedings, we now anticipate a flurry of new state and local tax laws to mimic the South Dakota law in addition to more aggressive enforcement by state and local tax authorities against out-of-state sellers for the collection and remittance of sales tax.
Stanley E. Heyman, Esq. is a Shareholder of Jackson Tidus whose practice area encompasses all aspects of federal, state and local taxation matters. He can be contacted at sheyman@jacksontidus.law