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South Dakota v. Wayfair: Overturning Physical Presence Rule, New Tax Challenges for Multistate Businesses

Sales Taxation Post-Wayfair for Remote Sellers of Goods and Services; Key Tax Planning Considerations

Featuring Attorneys Who Represented Wayfair in the Case

Recording of a 110-minute premium CLE/CPE webinar with Q&A

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Conducted on Thursday, August 23, 2018

Recorded event now available

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This CLE/CPE course will guide tax professionals and advisers on the state tax issues facing remote sellers of taxable goods and services after the U.S. Supreme Court’s decision in South Dakota v. Wayfair. The panel features attorneys who represented Wayfair in the case who will discuss the ramifications of the Court’s overturning of the physical presence rule, potential expanded tax obligations for multistate businesses, standards under the economic nexus law, sourcing of sales for sales and use tax purposes, and critical considerations for companies in light of the Court’s decision.

Description

The U.S. Supreme Court issued its decision in South Dakota v. Wayfair, overturning Quill Corp. v. North Dakota, which required businesses to have a physical presence in a state to create nexus for sales and use tax purposes. States may now require remote sellers of taxable goods and services to collect and remit sales tax without a physical presence in the state.

The Court determined that Quill was wrongly decided, and misapplies the four prong test of Complete Auto Transit v. Brady. It also created the anomaly that businesses located in a State were at a competitive disadvantage to out-of-state businesses. South Dakota’s statute states that if a retailer makes in-state sales exceeding $100,000 or makes 200 or more separate sales transactions in the previous or current calendar year, that retailer has sales and use tax nexus and must collect and remit sales tax to the state. Other states have adopted, or are considering the adoption of, some form of this economic nexus statute, either through legislation or regulation.

In eliminating the physical presence rule, but not establishing a specific standard for substantial nexus, the Court explained that existing Commerce Clause doctrine would apply to address taxpayer concerns regarding any undue burdens created by state tax laws. Since the Court did not address the issue of retroactivity and other related challenges, states may seek to enforce existing laws and/or adopt new economic nexus provisions with varying thresholds to take advantage of additional tax revenue. Tax professionals and advisers must be aware of myriad challenges facing multistate businesses and available methods to minimize state tax liability. There is also a possible spillover effect of the decision on other state taxes.

Listen as our panel, counsel for Wayfair in the case, discuss the impact of the U.S. Supreme Court’s decision in on multistate businesses, provides an analysis of economic nexus in various states, and offers key tax planning considerations for remote sellers of taxable goods and services.

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Outline

  1. Overview of Supreme Court decision overturning physical presence rule
  2. Detailed analysis of South Dakota’s economic nexus law and other states’ laws
  3. Effect on various sellers of products and services, including providers of IT products and services
  4. The Wayfair decision’s implications for other state taxes, including gross receipts taxes and income taxes
  5. Key considerations and planning strategies to minimize state tax risks

Benefits

The panel will discuss these and other relevant topics:

  • Critical factors in the Supreme Court’s decision to overturn the physical presence rule
  • State economic nexus regulations and legislation after Wayfair
  • Impact on remote sellers of goods and services
  • Wayfair decision effect on other state taxes
  • Key tax planning considerations to minimize state tax liability

Faculty

Bernert, Edward
Edward J. (Ted) Bernert
Partner
Baker & Hostetler

Mr. Bernert concentrates his practice in the area of state and local taxes with a particular emphasis on the major...  |  Read More

Eisenstein, Martin
Martin Eisenstein
Managing Partner
Brann & Isaacson

Mr. Eisenstein is one of the nation’s leading experts in state and local taxation of information...  |  Read More

Schaefer, Matthew
Matthew P. Schaefer
State and Local Tax Partner
Brann & Isaacson

Mr. Schaefer regularly advises clients on state sales and use tax issues, including those involving direct mail...  |  Read More

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