The 2018 Supreme Court decision, in South Dakota v. Wayfair, overturned prior decisions that had made it impossible for states to collect sales taxes from remote sellers. They certainly tried in different ways, but were shot down by various courts. It was the long-sought Wayfair decision, as it’s known, that opened the door for states to collect taxes on most online sales.
“Prior to the Wayfair decision, although some ecommerce sellers were going down the path of starting to collect sales tax on their sales, online sales was still a potential avenue to avoid the sales tax,” says Chuck Maniace, vice president of regulatory analysis at Sovos, a tax compliance firm.
Wayfair allows states to demand that businesses without a physical presence collect and remit taxes, assuming they make at least $100,000 worth of in-state sales. Following the decision, large states such as California and Texas have set the threshold higher, at $500,000. States differ in terms of how many in-state transactions can take place before a seller has to collect taxes (generally, about 200).
Author(s): ALAN GREENBLATT
Publication Date: 22 January 2021
Publication Site: Governing