The Bad News Is That There Is No Easy Answer…
The Wayfair sales tax Supreme Court decision has major implications for the sales tax obligation of U.S. companies. State economic nexus and reporting requirements have become more relevant as Wayfair tax case becomes the standard by which states pursue sales and use tax compliance.
The Wayfair tax ruling allows states to impose a tax payment on out-of-state business, regardless of whether the business has a brick and mortar presence in the state. Since Wayfair is not limited to state and local or use taxes, taxpayers also need to evaluate their income tax nexus.
How Can You Determine Which States You Need to File in and What Taxes Are Owed?
The Wayfair sales tax ruling was issued on June 21, 2018. As of that date, states are actively looking to enact economic nexus standards through statutes and regulations.
The states are implementing limits and effective dates for sellers. Identifying effective dates and tax filing thresholds in each of the multiple jurisdictions becomes a crucial aspect of the overall state nexus analysis.
The Wayfair tax lawsuit decision may apply in the following scenarios:
- The business makes sales into states in which it is not registered or filing sales/use tax returns.
- The business ships goods or provides services to customers located in the states where it has little or no in-state physical presence.
- The business makes retail sales of tangible goods.
- The company provides online services or makes sales of digital goods.
- The business licenses software or provides access to the software.
- The business received a “nexus questionnaire” or received an audit or tax notices from any state where it is not currently registered for sales/use taxes.
In today’s marketplace, your business is more likely to operate in multiple states. Having a national presence generates significant challenges for your state, county, and local tax law compliance. A nexus study would need to be performed in order to gain a better understanding of your potential liability.
Our State and Local Tax (SALT) team are eager to work with you to help assist your business in assessing your risk.