On Thursday, June 21, the U.S. Supreme Court issued its ruling in the case of South Dakota v. Wayfair. This case, which Accounting Today referred to as “the tax case of the millennium,” held the promise of clarifying, once and for all, the thorny issue of local internet sales tax collection.
The issue at hand: Companies that sell goods over the internet are still subject to the same sales tax collection requirements as physical stores. The challenge, of course, has been the question of actually collecting those taxes, particularly when one considers that (once local sales taxes are taken into account) there are well over 10,000 individual tax jurisdictions in the United States.
Until this latest ruling, the guiding legal principle in this issue was established by the Supreme Court in their 1992 Quill Corp. v. North Dakota ruling. At that time, the Court ruled that the test for whether internet companies would be required to collect and remit sales taxes would be whether or not the company has a physical presence in that state. The definition of “physical presence” has been controversial for years as Amazon grew its fulfillment network across dozens of states using subsidiaries that did not meet the definition of “physical presence.”
Click here or to the right to learn more about the ruling on this case and its implications for both pure play eCommerce retailers and bricks-and-mortar stores.
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