• Facebook
  • Twitter
  • Linkedin
BACK TAXES HELP
  • Tax Problems
    ▼
    • Tax Problems Overview
    • Audit
      ▼
      • Audits Overview
      • Audited and Can’t Pay
      • Avoid Tax Audit
      • Statute of Limitations
    • Business
    • IRS Letters
    • Tax Levy
      ▼
      • Tax Levy Overview
      • Bank Levy
      • IRS Asset Seizure
      • Protect Assets
      • Release Tax Levy
      • Social Security Garnishment
      • Tax Levy Appeals Process
      • Wage Garnishments
    • Tax Lien
      ▼
      • Tax Lien Overview
      • Release or Withdrawal of Tax Lien
      • Appeal Tax Lien
      • IRS Form 14135: Discharge Tax Lien
      • IRS Form 12277: Request Lien Withdrawal
    • Tax on Settlement of Consumer Liabilities
    • Tax Penalties
      ▼
      • Tax Penalties Overview
      • Failure to File Penalty
      • Failure to Pay Penalty
      • IRS Interest Underpayment
      • Late Filing Penalty
      • Late Payment Penalty
      • Tax Evasion
      • Tax Fraud
      • Trust Fund Recovery Penalty
    • Unfiled Taxes
      ▼
      • File Back Taxes
      • Unfiled Taxes Return
      • Unfiled Tax Return Consequences
    • Unpaid Taxes
      ▼
      • Unpaid Taxes Overview
      • IRS Collections: How The Process Works & How to Stop It
      • Find Out Tax Amount Owed
      • IRS Statute of Limitations
  • Tax Solutions
    ▼
    • Tax Solutions
    • Bankruptcy
    • IRS Tax Appeal
      ▼
      • IRS Tax Appeal Overview
      • IRS Collection Due Process (CDP)
      • Collection Appeals Program (CAP)
    • Payment Plans
      ▼
      • Payment Plans Overview
      • Installment Agreements
      • Short-Term Extension
    • Tax Settlement
      ▼
      • Tax Settlement Overview
      • Innocent Spouse Tax Relief
      • Offer in Compromise
      • Penalty Abatement
      • Prove Financial Hardship
      • Tax Negotiation
  • State Tax Relief
  • About Us
    ▼
    • About BackTaxesHelp
    • Tax Professionals
      ▼
      • Tax Professionals Overview
      • CPA
      • IRS Enrolled Agent
      • Tax Attorney
      • Tax Resolution Services
      • Taxpayer Advocate Services
      • Low Income Taxpayer Clinic
      • Tax Relief Scams
    • Tax Services
      ▼
      • Our Tax Services
      • Tax Process
    • Testimonials
    • Our Team
    • Get A Quote
  • Resources
    ▼
    • Resources Overview
    • Back Taxes FAQ
    • Forms: IRS and State
    • How To
    • IRS Phone Numbers
    • Power of Attorney
    • Tax Filings
  • Tax Blog
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Back Taxes Help HomepageBack Taxes Help

Get tax help

Call for a Free Consultation800-928-5035
Call for a Free
Consultation
800-928-5035
  • Tax Problems
    • About Tax Problems
    • Audit
    • Business
    • IRS Letters
    • Tax Levy
    • Tax Lien
    • Tax on Settlement of Consumer Liabilities
    • Unfiled Taxes
    • Unpaid Taxes
  • Tax Solutions
    • About Tax Solutions
    • IRS Tax Appeal
    • Repayment Plans
    • Tax Settlement
  • State Tax Relief
  • About Us
    • About BackTaxesHelp
    • Tax Professionals
    • Tax Services
    • Testimonials
    • Our Team
    • Get a FREE Quote
  • Resources
    • Tax Resources
    • Back Taxes FAQ
    • Forms: IRS and State
    • How To
    • IRS Phone Numbers
    • Power of Attorney
    • Tax Filings
  • Tax Blog
Home / Tax News / Sales Tax Implications of the U.S. Supreme Court’s Wayfair Decision

Sales Tax Implications of the U.S. Supreme Court’s Wayfair Decision

July 6, 2018 By Guest Blogger

  • Facebook
  • Twitter
  • Linkedin

tax

The recent U.S. Supreme Court decision in South Dakota vs. Wayfair has opened the door for states to collect sales tax from online retailers who conduct business—but don’t have a physical presence within the state. The court overturned the case of Quill Corp. v. North Dakota. It established the physical presence rule in 1992. This decision can be seen as a win for states because they now have some guidance on how to collect sales taxes from e-commerce businesses without violating the commerce clause. It could also put out-of-state online retailers on equal footing with other companies that have to collect and remit sales taxes. Congress still has the opportunity to set firm standards on how states impose sales tax obligations. The Marketplace Fairness Act, legislation pending in Congress tries to accomplish this as well but it has not passed. Until then, each state will have to use the Wayfair decision as a rule-of-thumb to determine whether their sales tax laws could withstand judicial scrutiny.

South Dakota vs. Wayfair

State sales taxes apply to online transactions even where the retailer has no physical presence in the consumer’s state. However, the consumer is required to remit the tax rather than the retailer in these cases. Various tax laws refer to this as the use tax. Consumer compliance rates are meager, and South Dakota estimated that the Quill rule cost the state between $48 and $58 million annually. At issue, in this case, was a South Dakota law that required online retailers to collect and remit sales tax. The law essentially tried to bypass the physical presence requirement from Quill for businesses that conducted a certain number of transactions or had a specified amount of revenues within South Dakota. The court had to decide whether Quill was still a valid precedent in the age of e-commerce. At the time Quill was decided, online sales did not yet exist and mail-order businesses were a more significant concern. In overturning Quill, the court noted that the decision had created a tax shelter for out-of-state businesses. It also gave companies an incentive not to have a physical presence within some states to sidestep the sales tax. After eliminating the physical presence requirement, the court still had to determine whether the South Dakota law violated other commerce clause precedent. The court concluded that the law applied to businesses with a substantial nexus to South Dakota and that the law did not discriminate against or unduly burden interstate commerce.

States Could See a Boost to Sales Tax Revenue

Wayfair gives states permission to tax businesses that don’t have a physical presence. Online retailers have to comply with these regulations as a cost of doing business. Wayfair can be a victory for tax fairness.  The ruling allows for similar treatment of brick-and-mortar businesses. They can’t avoid collecting and remitting sales taxes just because they sell their products on a website rather than in a showroom. But online businesses could also face a tremendous burden complying with state and local sales tax regulations. The dissent noted that over 10,000 jurisdictions levy sales taxes, each with their rates, exemptions, standards, and definitions. The numerous state and local tax laws create considerable compliance cost for any online retailer. However, the laws create a significant cost mainly for small businesses that sell products online. However, Wayfair does not give states unlimited authority to impose sales tax requirements on any business. Those that go too far could risk violating the commerce clause doctrine and have their laws shot down in court.

How States and Congress May Respond

The South Dakota law at issue in Wayfair may be viewed as a kind of safe harbor by other states with sales tax laws. If their laws are less burdensome than the South Dakota law, they may feel confident that they could survive a judicial challenge. Specifically, states can look at three aspects of the South Dakota law for guidance:

  • The law only applied to businesses that had over $100,000 in annual revenues or 200 transactions within the state.
  • Not retroactive. The law only applied to current transactions to avoid the mess of having businesses retroactively pay sales taxes.
  • South Dakota adopted the Streamlined Sales and Use Tax Agreement. Many states have taken this to give some uniformity to their sales tax requirements.

Congress may respond by setting standards by which states can collect sales taxes. It could go even further by minimizing compliance costs for businesses but yet still let states get their cut. Until Congress acts, states may use Wayfair as an opportunity to improve their bottom-line. However, at the same time, not place too much of a burden on businesses.

Primary Sidebar

Tax Problems?





Categories

  • Business Taxes
  • Celebrities
  • Entertainment
  • FAQ
  • Filing Taxes
  • How To
  • Installment Agreements
  • Payment Plans
  • State Taxes
  • Tax Audit
  • Tax Credits & Deductions
  • Tax Filing Extension
  • Tax Help
  • Tax Law Changes
  • Tax Levy
  • Tax Lien
  • Tax News
  • Tax Opinion
  • Tax Settlements
  • Tax Tips

SUCCESS STORIES

  • "I was in a tough situation. I didn’t have much money and I couldn’t pay my tax balance.  I was able to pay off my taxes over time with an agreement. Thanks again!"
    ~ Brian J., Orange, CA

  • "Thank you so much for your diligence in taking care of our situation. You were always available when we needed to ask questions, and you should be proud of your professional handling of our case!"
    ~ Mr. Wilson, Taylor, TX

  • "I had used another company previously, and I had concerns initially but you guys put me in good hands and in no time flat. This is such a weight off of my shoulders."
    ~ Mr. Szramiak, Philadelphia, PA

  • "My back taxes had been haunting me for years & the bank levy happened so quickly; I’m glad I had I requested a free consultation. Everyone is astonished they got all my money back so soon. I am eternally grateful!"
    ~ Mr. Mason, Minneapolis, MN

Resolve Your Tax Problems Today!

GET A FREE TAX ANALYSIS

Footer

53 Halloween Blvd.
Stamford, CT 06902
PH: 203-813-7549
Toll Free: 800-928-5035
admin@backtaxeshelp.com
Call for a Free Consultation
800-928-5035

facebooktwitter
Back Taxes Help
  • Resources
  • Sitemap
  • Privacy Policy
  • Terms of Use
  • Contact
  
Back Taxes Help BBB Business Review
Privacy Seal
Security Seal
ASTPS
  

Copyright © 2023 BackTaxesHelp.com


Disclaimer: We are not affiliated with the IRS, any private tax collector, or any state tax agency. The information provided on this website is for general educational or informational purposes only. Nothing on this website should be interpreted as legal or tax advice for any individual or business tax case. Before taxpayers sign up with a tax relief or tax resolution company, they should request a free consultation in order to understand how tax relief services work and the associated costs. The free consultation comes with no obligation to use any product or services. In many cases, a reputable tax resolution firm can provide taxpayers with relief.  

Scroll Up