On June 21, 2018, the Supreme Court decision was rendered in the South Dakota v. Wayfair, Inc. case which will likely bring major changes to state tax laws for online sales taxation.
The high court threw out the 1992 decision in Quill Corp v. North Dakota which prohibited states from imposing sales tax collection on vendors who lack a physical presence in the state. The court declared South Dakota’s rule as constitutional which will now require e-commerce companies to collect and remit sales and use taxes provided they meet certain sales thresholds. The Wayfair case imposes tax collection in South Dakota at a threshold of 200 separate transactions or in-state sales exceeding $100,000.
Technically the court threw out the Quill decision as no longer part of the commerce clause test but stopped short of declaring South Dakota’s law valid. However, we expect all other states who administer a sales tax to quickly mirror South Dakota’s model for state tax collection now that the law has been deemed constitutional. We will continue to monitor additional rulings and changes in the tax law in order to provide up-to-date analysis.
We hope you find this information valuable. If you have any questions, please contact us.