Supreme Court Upholds Internet Sales Tax Laws

Last Friday, June 22, 2018, the U.S. Supreme Court in the case of South Dakota v. Wayfair overturned its decision in the “Quill” case requiring a physical presence in the state before the need to collect sales tax. Now states can require the collection of sales tax by any entity and e-commerce site that sells product into the state (with exceptions.)

This decision was heavily influenced by the growth of the Internet economy and its effect on the States’ ability to collect taxes for the general welfare of its citizens. The dissenters to the decision said it was up to Congress to act.

Meanwhile, if you are selling product over the Internet, you need to pay close attention to the sales tax rules of the states into which you are selling. The court took efforts to point out that South Dakota was trying to protect the small retailer from burdensome effects as it did not require the collection of the sales tax until certain milestones were reached (e.g. $100,000 in sales or 200 transactions.) Further, they relied on the fact that the South Dakota statute was not retroactive. Further, South Dakota is among the 20 States that have adopted the Streamlined Sales and Use Tax Agreement. This system standardizes taxes to reduce administrative and compliance costs: It requires a single, state-level tax administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules. It also provides sellers access to sales tax administration software paid for by the State. Sellers who choose to use such software are immune from audit liability.

There already exist companies who have created a niche practice of guiding e-commerce sites on sales tax issues for a fee. Further, here is a link to Internet Sales Tax: A 50-State Guide to State Laws: .

Finally, this issue is more of an accounting issue than a legal issue. You should have a long conversation with your accountant on how they can help you with this issue.