South Dakota v. Wayfair
The Supreme Court rules in favor of South Dakota
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What is happening
The Supreme Court just released its decision on the landmark sales tax case, South Dakota v. Wayfair.
What did the Supreme Court decide?
The Supreme Court ruled in favor of South Dakota on June 21st, 2018. Prior to this ruling, an online seller only had to collect sales tax from buyers in states where the online seller had a physical presence. This physical presence requirement was known as "sales tax nexus." By ruling in favor of South Dakota, The Supreme Court has decided physical presence is not required.
A brief history
Back in 2016, South Dakota passed a law requiring any online seller – whether they have nexus in the state or not – to collect South Dakota sales tax if they either made more than $100,000 in gross sales in the state in a calendar year, or made over 200 individual sales in the state each year. They followed this action up by suing Wayfair, Newegg and other eCommerce retailers who currently did not collect South Dakota sales tax.
How does this affect my business?
States are no longer bound by the concept of sales tax nexus. Instead, any state is allowed to require that an online seller who makes a sale into their state collect sales tax. This adds a significant sales tax compliance burden for online businesses. TaxJar is here to help reduce the complexity and stress by helping you automate your sales tax needs.
A landmark decision was made today regarding sales tax and how it affects eCommerce sellers.
If you’d like to read more about the case or if you’d like to ask questions on the ruling, we recommend you sign up for our upcoming webinar and join the conversation.
Given the substantial impact of this ruling, I’d like to weigh-in with some thoughts from TaxJar and how we’re thinking about the sales tax landscape ahead.
There are a lot of unknowns
Since the decision was announced, we’ve heard from a LOT of current and prospective customers. Big or small, every eCommerce business owner today is wondering how this new ruling is going to affect their business, and how they can get ahead of it.
And while we don’t have all of the answers to every question now, the one thing we can agree on, is that technology will be a key part of compliance.
View Your eCommerce Sales by State
Start automating sales tax with TaxJar
With the latest ruling of South Dakota v. Wayfair, online sellers will need to know how many sales and how much sales tax to remit for individual states. TaxJar automates that entire process for you in just a few clicks.
Instantly View Where You Meet Economic Nexus
Start a free trial and connect TaxJar to the places where you sell
We offer a simple one-click connection to your shopping carts and marketplaces. Once connected, we'll begin importing your sales data into TaxJar.
TaxJar needs all of your data to determine where your sales have exceeded economic thresholds in each state.
Find the Sales Tax & Transactions Checker on your dashboard
It's now time to begin the check. Find the button to begin on the top right of your TaxJar dashboard.
In just a few minutes, TaxJar will automatically summarize the number of transactions and the amount of revenue for each state where economic nexus and notice & report laws have been passed.
View your results
See a list of all of the states where your sales and/or transactions have exceeded that state's economic threshold. Read through our recommended steps on beginning to comply with sales tax in a new state.
Automate with TaxJar
Now that you've connected TaxJar to the places you sell, continue using your free trial to manage your sales tax and enroll in AutoFile.
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No problem. We can connect to multiple eCommerce stores such as to Amazon, PayPal, Shopify and other shopping carts. If you use a cart we don’t integrate with, you can easily upload a .csv file of your transactions.
Economic nexus laws are passed by a state to require sales tax compliance in that state if a threshold in sales is met. For example, “If an online seller, even though they don’t have a presence in our state, makes more than $X in sales in our state, or conducts more than X number of transactions in our state, then they are required to collect sales tax from buyers in our state.”
Current state laws on economic nexus vary. The sales thresholds vary from $10,000 to $500,000 in sales, and some states don’t have a transaction threshold, at all.
Sure! Tell us what states you collect sales tax in and we’ll do the rest.
Yes. With AutoFile you can file sales tax returns in most states. Learn more about AutoFile.
Now that the decision is made and Quill has been overturned, the states are free to pursue sales tax from online retailers who exceed the thresholds as stated in their economic nexus laws. However, there’s also a chance that Congress could step in and pass a law regulating sales tax.
If you meet economic nexus thresholds in some states, we recommend speaking with a vetted sales tax expert to determine your course of action.