In a case that will likely change the landscape for online retailers, the Supreme Court has ruled against Wayfair in the South Dakota v. Wayfair case. This decision gives states more latitude to collect sales tax on out-of-state internet sales. Companies will now need to revisit their filing responsibilities and might be forced to address the taxability of their sales in new states.
The Supreme Court was reconsidering a previous ruling in the Quill v. North Dakota case that limited the ability of state governments to require the collection and remittance of use tax in the absence of an online retailer’s physical presence in that state.
South Dakota had previously passed what some commentators have called “Kill-Quill” legislation. Under South Dakota’s “Kill-Quill” law, sellers of “tangible personal property” who lack a physical presence in South Dakota must collect and remit if they meet either of two standards:
These “Kill-Quill” laws, understood to be unconstitutional by the states at the time of enactment, were successful in putting the case before the Supreme Court.
A state that models itself after South Dakota’s “Kill-Quill” law might be better-positioned to avoid being challenged whereas a state that attempts to enact a broader based tax that impacts smaller businesses may face opposition. In light of this decision, contact your DGC Engagement Team.
For additional information about this or other related topics, contact Stephen Minson, CPA, MST at 781-937-5120 / firstname.lastname@example.org or Joel Rothenberg, CPA, JD, LLM at 781-937-5135 / email@example.com.