South Dakota v. Wayfair and Its Impact on Your Business

In 2018, the Supreme Court’s decision in South Dakota v. Wayfair changed the game for sales tax and online businesses. Before this ruling, businesses only needed to collect sales tax in states where they had a physical presence. However, the court decided that states could require online and remote sellers to collect sales tax, even without a physical location. This shift has significant implications for any business selling products across state lines.

What is South Dakota v. Wayfair, Inc.?

The South Dakota v. Wayfair case overturned the old rules that limited sales tax collection to businesses with a physical presence in a state. Now, states can require businesses to collect sales tax based on “economic nexus,” which means if you make a certain number of sales or reach a certain revenue threshold in a state, you will owe sales tax there. This ruling affects businesses of all sizes, particularly those that sell online or across state lines, creating new challenges in managing tax obligations and compliance due to each state’s different set of rules and thresholds.

Why This Case Matters for Your Business

The Wayfair decision brings up new complexities for businesses, now having to track their sales closely to see where they might owe sales tax. If this information isn’t accurately recorded and actively monitored, it can mean significant time wasted, resources used, and potential risks for your business. Many companies are finding themselves having to register, file, and remit sales taxes in states they never considered before — which can be overwhelming and confusing. This is especially true for smaller businesses that might not have the in-house expertise to handle these new requirements.

How TMTY Can Help

At TMTY, we’re here to simplify sales taxes for you. Our team specializes in Sales Tax Nexus analysis to help you understand where you have economic nexus and what your obligations are. We provide ongoing compliance support to keep your business on the right side of the law, no matter where you sell. With our expert guidance and management, you can navigate the post-Wayfair sales tax landscape with confidence, focusing on growing your business instead of stressing over tax rules.

If you’re unsure about your sales tax responsibilities, let us help you find clarity and peace of mind. Reach out to the sales tax pros at TMTY today for solutions to keep your business compliant and thriving.

FAQs: SOUTH DAKOTA V. WAYFAIR, INC.

In 2018, the Supreme Court ruled that states could require online and remote sellers to collect sales tax even if they don’t have a physical presence in the state. This ruling changed the way businesses handle sales tax.

Online businesses now need to track where they meet economic nexus thresholds, meaning they may owe sales tax in states where they exceed a certain level of sales or transactions, even without a physical presence.

Economic nexus occurs when a business triggers sales tax obligations in a state based on sales volume or transaction counts, even without a physical location in that state.

Yes, if you exceed a state’s economic nexus threshold, you are required to register, collect, and remit sales tax in that state to avoid penalties.

TMTY offers sales tax nexus analysis and compliance support, ensuring you meet all your state obligations under the Wayfair ruling and avoid costly penalties.