Sales Tax Regulations Challenged in US Supreme Court, Freestyle Solutions

In a case that could dramatically change the way eCommerce companies handle the collection of sales tax, the state of South Dakota has sued Wayfair and the case has made its way to the United States Supreme Court with a decision expected in June.

Traditionally eCommerce companies were guided by a decision reached in 1992 in the case of Quill Corp vs. North Dakota, that said states could only force businesses with a physical presence in a state to collect and remit sales tax, a business without a physical presence would be exempt.

With the rise in eCommerce sales states became aware that they were in theory missing out on a large source of revenue and have attempted to compensate with the creation of laws that allow them to tap the stream of revenue they believe they are entitled to receive.  This case deals with such a law and the outcome of the case could present a profound change in the way state’s consumers and eCommerce companies deal with the issue of sales tax. If the court rules in favor of South Dakota expect other States to act, a decision in favor of Wayfair retains the status quo for the moment but other states have similar cases open in the court system.

It is worth noting that Congress has been under pressure to act for some time and that pressure could increase depending on the decision reached by the Supreme Court.

For more information on this important topic please read this article, by our partner Avalara.

If you have questions about how you can manage sales tax or any requirement about how your company can prepare for change and manage your business better please contact the Freestyle Solutions team at: 800-858-3666, and select option 1.