New York Business Journal
by Anthony Noto
June 29, 2018
A recent Supreme Court decision is expected to shake the current sales tax structure of the country.
The 5-4 vote in South Dakota v. Wayfair Inc. overturned a 1992 ruling that prevented states from imposing sales taxes on online sales and catalog companies that don’t have a physical presence in the state where they make a sale.
Politicians and retail industry advocates praised the decision, saying it brings the law up to date.
How will this affect New York? To learn more, I consulted with Richard Bayer, a tax partner with professional services firm BDO Global. Here’s what he had to say:
What should New Yorkers know about South Dakota v. Wayfair?
South Dakota v. Wayfair has changed the game when it comes to sales tax. In a 5-4 decision, the U.S. Supreme Court came down on the side of the states, overturning Quill Corp.’s physical nexus standard and granting the states greater power to require out-of-state retailers to collect sales tax on sales to in-state residents.
BDO’s analysis of the decision discusses the impact of what is likely the most significant state tax decision from the Court in at least 50 years. The case marks a massive development in the debate over the digital economy’s responsibility for the collection of sales tax.
New York and other states can now require an online seller to collect and remit sales tax on purchases made within the state, even if the company doesn’t have a physical presence within the state. Essentially, the Court found that “economic nexus” or deriving receipts from customers in a state is sufficient to confer a sales tax collection obligation on out-of-state sellers.
It’s now up to each state to individually determine their respective sales and use tax rates, as well as the amount of goods sold that will qualify companies to collect this tax. Prior to the Court’s decision in Wayfair, over a dozen states have already enacted economic nexus statutes.