by Teri Grahn
On June 21, 2018, the US Supreme Court ruled on South Dakota vs Wayfair and overturned “Quill”; no longer will physical presence be needed in a state for sales tax collection. The Supreme Court has given the states the power to require businesses to collect their sales tax, just by having a certain amount of sales in a state. Physical presence still creates nexus but is no longer needed.
A company will need to determine if they exceed the economic nexus thresholds that the Supreme Court ruled were acceptable. The ruling in South Dakota is:
If a remote/out of state seller has either $100,000 of sales or 200 transactions in the previous year or the current year they will be required to register, collect and remit South Dakota’s sales tax.
With this decision, there are currently about 30 other states that have similar laws requiring remote, out-of-state retailers to collect sales tax, that are either effective now or within a few months. We expect most other states to pass similar thresholds as soon as they can.
For example, Minnesota has an October 1st effective date; one it shares with Illinois, Indiana, North Dakota, and Wisconsin (among others). Here is a visual of the states and effective dates:
We would love to go through everything you need to know for your specific situation including details about effective dates, thresholds, determination time periods, and instances of pending litigation for all of the different states that apply to you.
Please reach out to Redpath’s Teri Grahn, Sales and Use Tax Area Service Leader so she can review the specifics of the law with you and assist in determining how to comply.
Teri Grahn is the sales and use tax service area leader and is a certified member of the institute for professional taxation. She educates and assists commercial entities with multi-state sales and use tax procedures and compliance, and works with clients to review internal records and practices and educates their staff on processes. She also helps clients navigate the unknowns of entering new states and jurisdictions by researching specific products and services, system and invoice set up to remain compliant with future transactions. Teri also supports clients through sales and use tax audits by investigating assessments and answering questions throughout the process. Teri works with clients in various industries including manufacturing and distribution, construction and real estate, and technology. Prior to joining Redpath and Company in 2003, Teri performed sales and use tax audits for the Minnesota Department of Revenue for 9 years.More posts by Teri Grahn
We are a member of HLB International, a worldwide network of professional independent accounting firms and business advisors.