Alyssa McBride, CPA •
If you have been listening to business news recently, you probably heard of the Supreme Court Case “South Dakota v. Wayfair”. There is a lot of talk in the news, but nothing seems to specifically say, this is going to impact you because...
If you have been listening to business news recently, you probably heard of the Supreme Court Case “South Dakota v. Wayfair”. There is a lot of talk in the news, but nothing seems to specifically say, this is going to impact you because...
South Dakota v. Wayfair was ultimately about whether a company must have a physical presence in a state in order to be required to pay taxes, specifically sales taxes on behalf of the consumer. The old standing case, Quill v. North Dakota was from 1992, from before the era of internet sales, and had determined that if a business had no reach into another state other than sending sales, that the state could not impose a tax upon the business. With the internet now allowing companies to sell items to consumers in another state with a far greater ease, the Supreme Court decided that Quill v. North Dakota no longer made sense and overturned the decision.
This ultimately means that even if you have no physical presence in another state, you still may be subject to some of their laws regarding taxes. In South Dakota, if you sell $100,000 of goods or services to consumers in the state or engage in 200 or more separate transactions for the sale of goods into South Dakota, you are now subject to their rules regarding sales taxes. The laws for each state may differ, but if you meet their thresholds, it is expected that you will need to register with the state and remit sales tax on behalf of the consumer. Also, this ultimately may lead to states subjecting these businesses to income taxes.
As a New Hampshire business, you may think this is not fair because New Hampshire is a sales-tax free state. The State’s response has been of a similar nature, releasing a press release to the effect that they are going to require states to notify the state of New Hampshire of the tax obligations as well as require that the states adhere to certain requirements. However, if you meet certain thresholds you can expect to be required to remit tax soon.
State tax issues can be complicated so it is prudent to consult with your accountant before doing any out-of-state activity, be it internet sales, having a remote employee, or storing goods over the border.
This ultimately means that even if you have no physical presence in another state, you still may be subject to some of their laws regarding taxes. In South Dakota, if you sell $100,000 of goods or services to consumers in the state or engage in 200 or more separate transactions for the sale of goods into South Dakota, you are now subject to their rules regarding sales taxes. The laws for each state may differ, but if you meet their thresholds, it is expected that you will need to register with the state and remit sales tax on behalf of the consumer. Also, this ultimately may lead to states subjecting these businesses to income taxes.
As a New Hampshire business, you may think this is not fair because New Hampshire is a sales-tax free state. The State’s response has been of a similar nature, releasing a press release to the effect that they are going to require states to notify the state of New Hampshire of the tax obligations as well as require that the states adhere to certain requirements. However, if you meet certain thresholds you can expect to be required to remit tax soon.
State tax issues can be complicated so it is prudent to consult with your accountant before doing any out-of-state activity, be it internet sales, having a remote employee, or storing goods over the border.
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