Sales Tax Evolution: South Dakota v. Wayfair One Year Later

June 21, 2019 marks one year since the Supreme Court voted 5-4 in the case of South Dakota v. Wayfair. The ruling favored South Dakota, determining that states can broadly require remote sellers to collect and remit sales and use tax (SUT), even if they lack a physical presence in the state.

"In my 30 years of practice never have I seen a decision come down that has impacted so many clients, and I probably will never see another decision come down like this for the rest of my career."

-Craig Cookle, Partner in Charge SALT, Wipfli LLP

Fast forward to today, a lot has happened. We’ve identified three major implications since the historic ruling: states have responded and expanded economic nexus, businesses (small to large, across different industries) are experiencing an impact and there is an opportunity for CPA firms to help navigate, advise and consult their business clients.

States Respond

The ruling has paved the way for states to establish and enforce new economic nexus guidelines. Since the ruling, 40 states have responded by enacting new or modified economic nexus rules that require out-of-state sellers to register, collect and remit sales tax. Many of these states implemented economic nexus standards that cloned and/or was very similar to the South Dakota law. However, over time there will be different state interpretations as they evaluate how to react to the decision.

Businesses Impacted

The new guidelines and changes following the decision in addition to over 11,000 jurisdictions across the United States, make it even more challenging for business owners to stay up-to-date and ensure they are properly complying with sales tax regulations. Monitoring changing rules, efficiently collecting and remitting accurate sales and use tax and implementing the right solutions, has become more burdensome.

Opportunity to Help

Demand for sales and use tax services is at an all-time high. Businesses need a trusted advisor with the guidance and technology to accurately stay up to date with the complex and changing SUT requirements. CPA firms have an opportunity to offer a spectrum of sales and use tax services to minimize the strain of tax compliance for business clients. CPA firms are helping their clients by offering some of the following services:

  • Nexus Studies and Product Taxability reviews.
  • Identifying and prioritizing states where the client has the greatest economic presence in order to create a plan to register, collect and remit sales tax.
  • Provide compliance technology that calculates correct rates, file and remits payments and maintains exemption certificates.
  • Maintain SUT compliance through ongoing evaluations

Download our whitepaper South Dakota V. Wayfair: What it means for your firm and watch this hot topic video, Wayfair and Sales & Use Taxes to learn more about the impact of the Wayfair decision on both you and your business clients.

Additionally, if your firm is ready to help clients stay in front of a changing SUT environment and interested in building out a high growth SUT practice, we invite you to join us for our two day workshop this summer: Compliance & Advisory: Roadmap to Your Sales & Use Tax Model.