Solve your South Dakota vs. Wayfair Filing Challenges for Good
The Supreme court has ruled in favor of South Dakota, upholding the state’s ability to enforce sales tax collection by out-of-state vendors on out-of-state transactions.
“We are officially in a new era of sales tax. What we have considered to be foundational principles that define where businesses must collect and remit sales tax, are now entirely out the window. States now have almost a blank slate on which to write, and businesses will face a wave of new rules for tax compliance.” - From Chuck Maniace, Director of Regulatory Analysis
What it Means for You
Economic nexus may change your tax obligations if you sell into states where you’re not registered to collect and remit sales tax. Instead of requiring a physical presence in a state, economic nexus is determined by your sales revenue, transaction volume, or a combination of both.
What to Expect for the Future
Several other states with economic nexus rules will follow South Dakota’s lead. The challenge is that each state has a different start date and sales/transaction requirements that trigger nexus.
Preparing for New State Remote Commerce Taxation Requirements
How We Can Help
With South Dakota enforcing sales tax collection by vendors on out-of-state transactions, and many other states following suit, you will likely be required to file in several states you never had to before. This means the task of filing quickly and accurately is more burdensome than ever.
Sovos Sales and Use Tax Filing Solution relieves the burden caused by South Dakota vs. Wayfair by automating your sales and use tax filing obligations. This provides the least possible risk for your organization, and more time for you to focus on other crucial tasks you’re faced with.
Wayfair Decision Resource Center
Sovos and the Streamlined Sales Tax Project – Fact Sheet
List of States with Economic Nexus Sales Tax Requirements
How Multinational Retailers Can Sustain Tax Compliance Amidst Economic Nexus Rules
Five Tips to Prepare for Expanded Sales Tax Filing Obligations
Remote Sellers Guide to Sales Tax Penalties and Audit Risks
How to Prepare for New Remote Commerce Taxation Requirements
South Dakota v. Wayfair – Sales Tax Expert Q&A Webcast Recap
Sales Tax Moves into the Modern Age…Are You Ready?
Blog Post & Chuck TV
Leading Sales Tax Expert, Charles Maniace, Comments on South Dakota v. Wayfair Supreme Court Decision
Commentary with Director of Regulatory Analysis and Sales Tax Expert
South Dakota v Wayfair - Economic Nexus State Rules Update
Alabama Economic Nexus Standard – Taxing Remote Commerce Update
Hawaii Economic Nexus Update – Taxing Remote Commerce
Louisiana Taxation of Remove Commerce – South Dakota v Wayfair Decision Update
New Jersey Reaction to South Dakota v Wayfair Decision on Remote Commerce Taxation
Wisconsin Taxation of Remote Commerce – Post Wayfair Update
Expert Quick Take on The Wayfair Ruling
From Chuck Maniace, Director of Regulatory Analysis
“We are officially in a new era of sales tax. What we have considered to be foundational principles that define where businesses must collect and remit sales tax, are now entirely out the window. States now have almost a blank slate on which to write, and businesses will face a wave of new rules for tax compliance.”
"There is, however, still a standard for when businesses will have to charge and remit tax: a ‘substantial nexus.’ What does and does not qualify as substantial nexus will be defined over the next few years, but what we do know is that ‘substantial’ no longer means ‘physical,’ and that’s a huge change.”
Ask the Expert
What do e-commerce sellers need to know?
“Any business that sells through e-commerce should pay close attention to state rules, especially in the 20 states that have introduced the same or similar rules as South Dakota. Businesses that sell through e-commerce channels will need watch each state in to which they sell goods for new laws that are sure to come quickly, and they will have to monitor whether those states’ will be litigated under this revived standard set by Complete Auto Transit, Inc. v. Brady and Pike v. Bruce Church Inc.”
What does the ruling do for the states?
“States now have the ability to articulate that they have a reasonable standard to establish whether a business has substantial nexus that would require it to pay sales tax. In order to pass this standard, the rule must be reasonable and tax compliance must be manageable. The Court was clear to point out that South Dakota created a standard that does not burden commerce. They have a fairly simplified and uniform sales tax structure, their nexus law excludes small sellers, and as a Member State of the Streamlined Sales tax Agreement, they provide taxpayers with affordable software solutions.”
What role will software play moving forward?
“In today’s ruling, the Supreme Court discusses software as a means for easing the burdens of sales tax on businesses of all sizes, which seemed to be a key factor in the ruling.”
It's clear the court appreciated the nature of the South Dakota rule, which set a clear threshold for substantial presence and simplified its sales tax regime, including years of work as a member of the streamlined sales tax initiative, of which Sovos has been a part of for more than a decade. This ruling makes it clear that software is an important part of making sales tax compliance manageable and affordable, and as the ruling mentions, many reliable and affordable solutions are currently available from vendors like Sovos. This ruling should drive further adoption of software, particularly among smaller businesses that have largely flown under the radar until now.”
What’s next in the regulatory environment?
“We’ll likely see states quickly enacting existing rules and drafting new ones, but congress is the wild card. Everyone is waiting to see if they will step in to create a standard, which they have a right to do, or leave it to the states.”