SALT Nexus Impact of the Wayfair Ruling

The U.S. Supreme Court’s 5-4 decision, June 21, 2018, in South Dakota v. Wayfair, Inc., U.S. Supreme Court Case No. 17-494, (herein referred to as “Wayfair” or the “ruling”) will have a significant impact on U.S. multi-state businesses. The Court’s Justices ruled in favor of South Dakota, overruling the Court’s previous decision in both Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967), which placed an increased sales tax compliance burden on businesses with multi-state operations.

In its decision, the Court concluded that South Dakota’s law was not overreaching and pointed to several aspects of the State’s law in supporting its position. As a result of the Wayfair ruling, other states will need to consider whether their laws (or soon to be proposed laws) will fall within the parameters of the Court’s decision.

The Court’s decision will have a significant impact on businesses across many industries that sell products or services in multiple states. Although e-commerce is first-of-mind with this ruling, its decision will affect many more industries, businesses and customers, including, but not limited to:

Brick and mortar stores shipping to customers with locations in other states
Manufacturing, distribution and construction companies who buy, sell or provide services to clients in multiple states
Software vendors, including SaaS companies, issuing licenses in states where they are not registered
Health care providers or insurers
Professional services

Effective date for Economic Nexus by state.

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Publication | Mar 11, 2019
More About | Technology & Life Sciences | State & Local Tax | SALT Nexus

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More About | Private Equity | SALT Nexus

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Wayfair’s Impact on States’ View of Nexus & Potential Sales Tax Burden on Technology Companies

The South Dakota vs Wayfair ruling leaves many companies with a greater sales tax compliance burden and can impact both sales and purchases. With each state’s requirements varying widely, technology companies will need to dedicate more time and resources to meet states’ taxability and reporting requirements.

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Join DHG Assurance, Tax & Advisory professionals on January 9th as we discuss top issues affecting private companies. We’ll facilitate an interactive conversation to discuss the impacts of recently released guidance from FASB and the IRS.

Wayfair – The Impact on Manufacturers

The recent South Dakota vs Wayfair ruling will leave companies with a greater sales tax compliance burden and can impact both sales and purchases.