In last summer’s landmark decision of South Dakota v. Wayfair, Inc. (“Wayfair“), the US Supreme Court upheld South Dakota’s economic nexus law, which requires companies to collect sales tax when their sales or number of transactions with that state exceed certain thresholds.
Wayfair Applies to All Businesses
Software / SaaS Companies Are Hit Particularly Hard
Manufacturers, Wholesalers, Distributors, and Resellers Are Impacted Too
Thus, if a business meets the economic nexus threshold for a state but does not collect valid exemption certificates from purchasers within that state, the business is deemed to have sales tax nexus and all sales to those purchasers are taxable. Many businesses overlook this compliance step and create tax exposure where none should exist. This issue is further complicated for drop-sellers in the ten states that require the purchaser to be registered in the ship-to state.
Thus, even sellers to other-than end users must analyze economic nexus rules to ensure compliance.
How Bennett Thrasher Can Help
- Determine when and where you are required to collect and remit sales taxes under the new economic nexus rules;
- Determine whether your products and/or services are subject to sales tax in those states; and
- Find a sales tax compliance solution (including management of exemption certificates) that fits your business’s needs.