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On August 14, 2018, Delap's State and Local Tax (SALT) partner Harriet Strothers delivered a presentation discussing how the Supreme Court's ruling in the recent Wayfair case impacts all sellers. We are providing this presentation to you to inform you of how the Wayfair Ruling affects businesses both in and out of Oregon, and how to cope with these new requirements.
The Supreme Court of the United States (SCOTUS) delivered "Just What They Need" to South Dakota in the Wayfair ruling. The Supreme Court ruling on sales tax overturned a principal tenet in determining nexus. The Wayfair case pointed to a law South Dakota had enacted requiring out-of-state sellers to collect and remit sales tax “as if the seller had a physical presence” in South Dakota if the seller met the thresholds of $100,000 of goods or services delivered into the state or engaging in more than 200 or greater separate transactions for delivery into the state. Wayfair asked the court to declare the law unconstitutional. The court did not. South Dakota and other states now have the ability to force internet sellers to collect and remit sales tax across the country even though the seller doesn't leave the comfort of their own state.
Before Wayfair, case law set under National Bellas Hess, Inc. and Quill Corp., required a physical presence in order to establish an obligation to collect and remit sales tax in a state. Yesterday's monumental ruling in Wayfair has overturned this precedent. This opens the door for states to set different standards about who must collect and remit sales tax. This ruling will likely have the greatest impact on internet sellers.
What does this mean for a business selling over the internet? It means there will likely be an expanded need to collect and remit sales tax. It's unclear how the states will react to this ruling but it's clear they will react. Some states had already passed laws to be effective at the date of the Wayfair decision. Expect other states to follow suit.
We're watching the news and waiting for the backlash to begin. If you are an internet seller, this ruling impacts you. Stay tuned for updates. Call us today at 503-697-4118 to connect with your Delap Advisor if the Supreme Court ruling on sales tax impacts your business.