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The Wayfair Decision and The Changing Landscape Of Sales Tax

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The 1992 Supreme Court decision in Quill Corp. v. North Dakota has governed sales tax nexus issues for more than 25 years: physical presence in a jurisdiction was needed in order for a retailer to be required to collect sales tax. Thursday’s Supreme Court decision in South Dakota v. Wayfair, Inc. overturned Quill, ruling that South Dakota’s statute requiring remote sellers to collect sales tax if they have more than $100,000 of sales or 200 or more separate transactions to customers in the state is constitutional.

More than just an affirmation of the South Dakota statute, the Wayfair decision appears to confirm the constitutionality of statutes previously enacted in a number of additional states that impose sales tax collection obligations on remote sellers, as well as opening the door to similar obligations in additional states.

Mazars' Insights
At this time, it is uncertain as to how the states will apply the standards set forth in Wayfair, whether new state statutes will be enacted, and whether any retroactive payments will be required by any state. There is also a question of whether Congress will choose to act.

The sales tax landscape has now changed significantly and retailers should be prepared to act. Businesses should evaluate whether they need to charge sales tax in any state currently requiring remote sellers to collect. They should also be prepared to collect sales tax from customers in additional states in the near future, regardless of whether there is physical presence in the state.

Please contact your Mazars USA LLP professional for additional information.

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