South Dakota v. Wayfair, Supreme Court Rules States Can Require Online Sales Tax

AAFCPAs would like to make clients aware that the US Supreme Court on Thursday, June 21, 2018, in the case of “South Dakota v. Wayfair,” overturned its 1992 “Quill” decision, which had barred states from requiring internet and mail order vendors with no physical presence in a state from collecting sales tax on transactions involving in-state customers. Part of the Court’s reasoning involved examples of a seller’s website being accessible on a customer’s computer, or an app being downloaded onto a phone or tablet.

Larger online retailers, such as Amazon and Walmart, already have a presence in most (if not all) states, and are already collecting sales tax on e-commerce transactions. The specifics of how this will affect smaller retailers from a compliance standpoint are to be determined.  AAFCPAs anticipates that the process of collecting and remitting sales tax by companies who do not maintain a physical presence in multiple states will become far more complex. Third party software vendors will likely see an increase in business. Congressional action that delays or manages the implementation of the Court’s decision is also a possibility.

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The tax practice of AAFCPAs will continue to monitor the results of the ruling, and keep you informed as significant changes occur. If you have any questions on how this decision may impact you, please contact: your AAFCPAs Partner; or Richard Weiner, CPA, MST at 774.512.4078, rweiner@nullaafcpa.com; or Julie Chevalier, CPA at 774.512.4037, jchevalier@nullaafcpa.com.