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  • Sales Tax Alert - Wayfair

    An Important Update Regarding Interstate Sales Tax

    August 5, 2019

    Dear Client,

    In  2018, the  US Supreme Court case South  Dakota v.  Wayfair, Inc.  overturned  the physical presence requirements that determined a business's neeed to collect and remit sales tax.    

    Formerly,  sellers were  only required  to  collect sales and use taxes in states  their  businesses had a tax  nexus, and this tax  nexus was determined  by physical presence for sales and use tax  purposes.  Due to  the  ruling  in South   Dakota  v.  Wayfair, Inc.,  businesses involved  in interstate  commerce  could now be subject  to sales tax  laws in all  states  they are transacting within. If your business is engaged in internet based out-of-state sales, you could be exposed to  new laws passed by  more than 35 states  requiring the collection of sales and use tax.

    Most  states   have  passed  laws  affecting   sellers  engaging in  the  "substantial  privilege  of conducting  business"  in  the  state,   defining  parameters   that  apply to  remote  sellers  with annual  in-state   sales  of  more  than  $100,000  of  products  or  services,  or   200  or  more transactions.  Failure to comply with the sales and use tax requirements  in all applicable states could have detrimental  impacts on your company. Penalties on outstanding sales tax liabilities could bankrupt  your  company  in as little as a few  years' time.

    If your business participates in interstate or on line sales  of products or services, we urge you  to familiarize yourself with the laws and  sales  and  use  tax requirements in  states  you're conducting business. Our  firm does  not monitor sales  volumes or the number of transactions by  state, nor  do  we  register or file  sales  tax returns for you  when preparing income tax returns. It is imperative if you  have  a website selling products  or   services, or  you   offer sales   across state  lines,   that you   familiarize yourself with these rules  and  protect  your company. You  must take action on  this issue  as  it is  not in  the scope of our  tax preparation engagement.

    Consider contacting  your elected  Federal officials and alerting them  of the  need for a  small business  exemption   with   a  threshold   in  $10  million  in  sales.  Cost  of  compliance could overshadow  revenues  generated  from  out of state  sales. With over 9,000 separate state and local taxing jurisdictions  in the  United States,  we  felt  it critical  to  notify  you  and bring this issue to  your attention.   Please act sooner rather  than  later.  We cannot over-emphasize the importance of compliance with  these interstate sales and  use tax  rules.


                    GREENLEE, KURRAS, RICE, BROWN & GARNER, CPAs 


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