Source: https://www.cmsct.com/blog/how-does-the-new-ruling-affect-sales-tax-compliance-for-your-business
Timestamp: 2019-04-22 19:06:30+00:00

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The Supreme Court of the United States has ruled in favor of South Dakota in South Dakota v. Wayfair, Inc. The state is now free to enforce its Remote Seller Compliance law (SB 106), which requires out-of-state sellers with more than 200 taxable sales transactions delivered into South Dakota in a calendar year, or more than $100,000 in gross revenue from the same, to collect and remit sales tax.
South Dakota v. Wayfair, Inc. challenged the physical presence standard upheld by the Supreme Court in Quill Corp. v. North Dakota (1992). Quill held that a state cannot tax a business unless it has a substantial connection (nexus) with the state, defined as a physical presence. That decision has now been repealed, and the case has been remanded to the South Dakota Supreme Court "for further proceedings not inconsistent with" the Supreme Court opinion.
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The court heard oral arguments on April 17, and issued a decision today, June 21, 2018.
The court held: “Because the physical presence rule of Quill is unsound and incorrect, Quill Corp. v. North Dakota, 504 U.S. 298, and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753, are overruled.” Justice Kennedy delivered the opinion, joined by Justices Thomas, Ginsburg, Alito, and Gorsuch. Justices Thomas and Gorsuch filed concurring opinions. Justice Roberts dissented, joined by Justices Breyer, Sotomayor and Kagan.
South Dakota Congresswoman Kristi Noem, who successfully ran against Jackley to become the 2018 Republican gubernatorial candidate, is a long-time proponent of a Congressional solution to this issue. Her legislation, the Remote Transactions Parity Act (H.R. 2193), would allow states to require remote sellers to collect sales tax from the buyer, but would also require states to provide free software to in-state businesses to help them comply, and largely protect businesses using this software from audit.
It’s likely that other states will work to enact economic nexus legislation in the same vein as South Dakota SB 106. Already, in the months since the court agreed to hear this case, several states have adopted economic nexus, including Connecticut, Georgia, Kentucky, Hawaii, Illinois, and Iowa.
However, a Supreme Court ruling in favor of South Dakota could also spur Congress into action. If it decides to answer Justice Roberts’ call, it could move to strictly regulate interstate commerce by pursuing the No Regulation Without Representation Act (H.R. 2887) or pursue the Remote Transactions Parity Act or the similar Marketplace Fairness Act (S. 976), both of which would allow states to tax certain remote sales.
With or without Congressional action, it will take some time for the effects of this decision to play out. To learn more about how the ruling in South Dakota v. Wayfair, Inc. could impact your business, attend our June 28, 2018, Q&A panel discussion with Scott Peterson, Vice President of U.S. Tax Policy and Government Relations at Avalara, and Rachel A. Le Mieux — CPA, CMI, and partner at Peterson Sullivan LLP.
Learn more about South Dakota v. Wayfair, Inc.

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