(And Yes, this Impacts All U.S. and Non-US Businesses with U.S. Customers)
Executive Summary: After Wayfair, unless Congress intervenes:
- The physical presence sales tax taxability standard is now gone - at least under circumstances like those presented by South Dakota's situation.
- Income taxes were already assessable without a physical presence in most states, so out-of-state and non-U.S. businesses with more than a very small amount of U.S. customer business can expect to have to deal with multiple taxes in each customer state.
- Prices (not just taxes) will go up, for consumer and business customers.
- Tax appeals and litigation replace the "bright line rule" we had for the last 51 years.
This article contains a brief introduction, a historical summary, a summary of immediate impacts, and a legal/technical critique of Wayfair for attacking and/or legislatively overriding a Wayfair-type result.
On June 21, 2018, a 5-4 decision from the U.S. Supreme Court eliminated the "physical presence" safe harbor from state sales taxation that had stood since 1967. Until now, businesses – including non-U.S. businesses – with no physical presence in a given state ("customer state") did not have to bother with the various sales tax rules of that state, much less register and then collect and remit the various sales taxes within that state. "Out-of-state" and "out-of-country" businesses have relied upon this rule for over 50 years, just as their customers have benefited from correspondingly lower pricing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.