I would like to thank the Supreme Court for their welcome of me back to the world of Sales Tax*.
They really shouldn't have dropped a nuclear bomb though. A nice card would have been fine. I like ones that play a tune (hint, hint).
I was going through my Nexus presentation slides after I read the opinion and ... well... gee...there's nothing left. I'm going to have to put a big "THIS IS GONNA CHANGE" slide at the beginning and it will pretty much apply to everything else in the deck. By the way, I'm going to be doing a NEW nexus webinar covering this topic. Watch this space.
I've spent the last couple of days reading articles about this and I've listed some of the better ones at the bottom of this post. If you haven't been reading, please do so. Maybe you'll catch something I've missed.
Here's my take (subject to correction by smarter people than me):
1. The nexus rules requiring a physical presence in a state before being subject to that state's jurisdiction...poof! There is no physical presence required. The law we've been relying on since 1967? It's all gone, man! All that is required is having substantial nexus, which can be achieved in several ways - including simply having a lot of customers in the state. No people, real estate or stuff necessary anymore (argh..my seminar!).
2. Congress better get on the case. The Supreme Court has left the landscape devastated and only Congress can fix things. Otherwise, there are going to be a lot more court cases in the next few years (oh heck, probably in mere months). The Supreme Court has passed the ball to Congress essentially saying, "Hey we blew everything up. We sure hope you have some ideas."
Congress has three bills that they've been looking at, but nothing has been happening. They really hate touching taxes if they don't have to. But I'll bet things will happen now.
I actually wonder if the Supreme Court justices were all sitting around the conference table arguing over who got extra mayo on their roast beef and someone said, "Oh, the hell with it...blow it up. Maybe that will get Congress to do something." Convince me I'm wrong.
3 If the Supreme Court justices ran for election, I would wonder about the contributions they received from the software companies. Because you're gonna need software. And it isn't just big companies that need software. Small businesses will too. If you invested in sales tax software stock before last Thursday, congratulations. I think you and I are long lost cousins, and I'd like a loan please.
4. As of now, regardless of your business size, you may have nexus in a whole bunch of states. Some states, like South Dakota who started this mess, at least put a safe harbor in place so that companies that didn't sell much in South Dakota didn't have to worry about it (200 individual sales or $100,000 in sales, annually). But others don't give that break. Some states might begin, on MONDAY, to enforce the new rules, regardless of the size of the sellers.
The Supreme Court used South Dakota's rules to show an example of what substantial nexus is. But states might go nuts anyway! The Supreme Court did not say that South Dakota's threshold was THE rule, but they sure do like it. I wonder if the reason the Supreme Court decided to take this case was because South Dakota was smart enough to provide an agreeable safe harbor that the Supreme Court could point to as guidance.
5. So what do you do? I'm not going to say, "don't panic," because you may want to, you know, panic. One thing to do would be to write your Congressman/woman. Congress can fix this. But they just need to have the gumption to do it. Maybe take care of the tip at lunch.
But we know how useful they are. So watch the states you sell to, for both stuff and services. If you sell more than the safe harbor rules that South Dakota provided, then you're definitely going to to have to deal with more states asking you for money. Avalara put together a nice article summarizing the situation for each state. Thanks, Avalara.
Speaking of software companies, all those brochures and emails you've been ignoring? You probably want to start looking at them.
Oh, this is so nasty.
Finally, if I see the words, "level the playing field" one more time (grits teeth)... You'll see why if you read just a sampling of the links below.
*I've been pretty much off for the last year+ for a whole collection of reasons. Let's just say it has not been a great year. But all is now well. Except for the Supreme Court going nuts.
I'm baaacccckkkkk.
Jim Frazier
The Sales Tax Guy http://salestaxguy.blogspot.com
See the disclaimer on the right.
Here's some recommended reading:
http://www.leveragesalt.com/blog/2018/6/companies-without-a-physical-presence-in-a-state-may-now-be-required-to-collect-sales-tax
http://taxprof.typepad.com/taxprof_blog/2018/06/5-4-supreme-court-clears-way-to-collect-sales-tax-from-online-retailers-in-todays-wayfair-decision.html
http://taxprof.typepad.com/taxprof_blog/2018/06/holderness-south-dakota-v-wayfair-the-more-things-change-.html#more
https://www.jdsupra.com/legalnews/the-u-s-supreme-court-changes-sales-and-65422/
http://money.cnn.com/2018/06/21/technology/wayfair-vs-south-dakota/index.html
https://taxfoundation.org/supreme-court-decides-wayfair-online-sales-tax-case/ along with a discussion of the brief they filed in this case
https://www.avalara.com/us/en/blog/2018/supreme-court-rulesthatsouthdakotacantaxsalesbyoutofstatesellers.html
https://www.jdsupra.com/legalnews/south-dakota-v-wayfair-inc-what-it-98145/
https://www.jdsupra.com/legalnews/breaking-news-us-supreme-court-32978/
https://www.salestaxsupport.com/blogs/industry/small-business-ecommerce/with-quill-dead-you-could-now-have-sales-tax-nexus-everywhere/
This article, from Avalara, discusses the way states to watch in the near term
Finally, I've also read the Supreme Court's opinion. I'd encourage you to read it. It's interesting reading and not as difficult as you might think.
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