The Wayfair sales tax case is a potentially worrying decision for remote sellers as it means they can be taxed for sales made in states other than those they are based in. It is vital that online retailers look into this case and matters such as the Wayfair Sales Tax exemption.
Wayfair Sales Tax case
In a close decision by the Supreme Court, things that are sold online can be taxed in the state they are sold to. The thinking is that in the modern age, online retailers have a tax advantage over those with a physical presence in a state. Also the states know that if online retailers are taxed, a lot of revenue can be raised. Effectively the Wayfair sales tax case means tax is based on the sales amount and the location of the customer rather than the seller.
Protection for small businesses
The new law only applies to sellers who run a substantial amount of business in the state. South Dakota had put in place provision that any online retailer with less than 200 transactions or annual sales of less than $100,000 would not be taxed.
South Dakota also is a member of the Streamlined Sales and Use Tax Agreement which should mean retailers find it easier to handle.
Making things easier
It would be simpler and probably will be if different states adopt simple and streamlined systems that are standard across most or all states.
The new law will not apply retrospectively which will be a huge relief for online sellers.
Software can makes things way easier for the business person who is far more equipped to do what they do best in terms of goods and services rather than working their way through tricky tax requirements.
Wayfair Sales Tax case and other states
States need to raise money so many are excited by the Wayfair Sales Tax case findings of the Supreme Court. Other states to watch regarding sales tax at this point include Washington, Wyoming, Wisconsin, West Virginia, Vermont, Virginia, Tennessee, Texas, South Carolina, Rhode Island, Pennsylvania, Oklahoma, North Dakota, New York, New Mexico, New Jersey, Nebraska, Mississippi, Minnesota, Maine, Louisiana, Kentucky, Iowa, Indiana, Illinois, Idaho, Hawaii, Georgia, Connecticut, Colorado, California, DC, Arkansas, Arizona, and Alabama. If you are an online retailer who deals with customers in any of these states, you do need to get clued up on the South Dakota case and to keep your eye on developments in other states. There are so many different types of online sellers including those who use platforms such as Amazon and Etsy.
Impact on Wayfair Sales Tax case
Many online sellers will be fearful and confused as when changes are made to any tax laws. It can be daunting to have to keep an eye on tax law changes, tracking sales volumes in different jurisdictions, and then actually collect and paying the sales tax in the right way and at the right time. What products will have sales tax on them in each state? It could be a minefield that might put off potential entrepreneurs. This is why software can give a holding hand and reassurance on tax matters.