Tax laws, particularly those regulating e-Commerce and sales tax, have suddenly become a lot more complicated. Last year’s Supreme Court decision on South Dakota v. Wayfair, Inc. changed the entire landscape of sales tax regulations. Changes in the interpretation of nexus have caught many online businesses by surprise; physical presence is no longer the only consideration when determining nexus.
E-Commerce sellers can have nexus with a state by simply selling into that state. The Court ruled that states can force online retailers to collect sales tax, regardless of the company’s physical location. And if they don’t collect sales tax from their customers, the burden to pay the tax falls on the seller, along with any penalties and interest the state may assess. Consequently, many retailers are realizing, sometimes too late, that their tax exposure is far greater than they thought. Even companies large enough to have their own in-house tax teams often find it hard to keep up with or prepare for the rapidly changing regulations. Startups and those companies that have experienced dramatic growth are particularly vulnerable.
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by stephen day, VPTax
march 19, 2019