Attention online stores and E-Commerce websites!! This one is especially for you.

Remember the times when you ordered online from amazon.com and they didn’t charge you tax; a beacon of joy would take over you.  Or better yet, if you had a business and you didn’t have to concern yourself with calculating and collecting sales tax on sales in states in which you lacked nexus (physical presence). Well those days have gotten away from us, and we can charge it to the Wayfair Act.

The Wayfair Act emerged from the Supreme Court Case South Dakota vs Wayfair Inc. In which the Supreme court ruled in favor of South Dakota requiring out of state sellers to collect and remit sales tax
“as if the seller had a physical presence in that state”. The act applies to sellers that on an annual basis deliver one of the following:

• $100,000 or more in goods/services into the state
• 200 or more separate transactions for the delivery of goods and services into the state

Let’s break this down, and give an example.

Let’s say you have an online business based in Texas and you sale $250,000 of goods to customers in South Dakota. You are subject to sales tax based on the fact that you sold more than $100,000 into that state.

Now Let’s switch up the scenario and say you sale $50,000 of goods which equated to 300 orders to customers in South Dakota. You are subject to sales tax based on the fact that you had over 200 separate transactions(orders) in that state.

This act was a direct target to online stores such as AMAZON.com and WAYFAIR.com, as well as, businesses with no physical presence in the state where goods/services are delivered.

The states have been missing out on revenue with the rise of E-commerce. This monumental case has provided state’s the support needed to legally go after businesses and COLLECT.

Have questions? Hit us in the comments or contact us.