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Wayfair the Sales Tax Fanfare

Well here we are.  It has been well over a year since the United States Supreme Court’s decision in South Dakota v. Wayfair, Inc.  As a refresher and not to make your eyes agonizingly glaze over with the down and dirty tax details, Wayfair essentially upheld South Dakota’s tax law that required remote retailers with no physical presence in the state to collect and remit South Dakota sales tax.  Prior to Wayfair, states could not require retailers without a physical presence in such states to collect and remit sales tax pursuant to the Supreme Court’s decision in Quill Corp v. North Dakota.

Nathan Vinson

Nathan Vinson

South Dakota’s remote retailer law sets a threshold requirement for its application.  A remote retailer must, on an annual basis, deliver more than $100,000 of goods or services into the state or engage in 200 or more separate transactions for the delivery of goods or services into the state.  The law therefore contains a so-called small retailer exception.

After Wayfair, an overwhelming majority of states were quick to follow South Dakota in adopting laws that require remote sellers to collect and remit state sales tax.  Kentucky simply adopted South Dakota’s standard (>$100,000 or 200 or more transactions), while some states created more favorable standards (e.g. Tennessee doesn’t require collection and remittance until receipts total more than $500,000), and other states created more stringent standards (e.g. Kansas will attempt as of October 1, 2019 to require all remote retailers to collect and remit Kansas sales tax with no monetary or transactions threshold).  The takeaway here is that most states that impose a sales tax (only five do not) have adopted some type of remote retailer sales tax statute, regulation, or policy post-Wayfair.  It is more than certain that this tug-o-war between the states and online retailers is not over yet.

If you have questions about the implications of the Wayfair decision on your business, contact me anytime: Nathan Vinson (nvinson@elpolaw.com or 270.781.8500).