This decision has implications for online retailers, retail service providers, and businesses of all kinds.
Learn how Wayfair affects your company – and how Anybill’s automated solution can help you and your clients manage tax payments.
What is South Dakota v. Wayfair, and what does it mean for you?
What is Wayfair?
Prior to the ruling, online sellers were only required to collect sales tax in states where the seller had a physical presence. In June 2018, the Supreme Court ruled in favor of the State of South Dakota. In doing so, the Supreme Court eliminated the physical presence requirement.
Now, a state can require an online seller to collect tax on any sale that takes place within the state’s borders.
Who does Wayfair affect?
This decision means that organizations will now have to collect and pay sales tax to any state that requires it.
Many groups will be impacted, including: online retailers, consumers, government and jurisdictional entities, tax compliance businesses and software providers, and retail service providers.
How will Wayfair impact you?
States can now decide, on a state-by-state basis, to impose sales tax obligations on online sellers.
Businesses will need to collect sales tax and pay the states that require it. Tax software solutions and service providers will have additional work to ensure their clients remain compliant.
The new tax compliance landscape
Considerations for Each Group
Recent judicial decisions and ensuing legislative changes have an effect on many different groups associated with e-commerce, and the following information addresses some general questions that may be posed by each of the groups involved with this form of business.
Anybill is prepared to support these groups and the sales and use tax compliance process as we have since 2006. Based on our experience, we can make payments and mail returns to support a variety of scenarios and business models, since we work with 11,000+ taxing jurisdictions, know the payment procedures for each, and have the infrastructure to scale and address any transaction volume.
Click on the sections below to see how Wayfair may impact you.
You will pay a sales tax for all purchases made online, just as you would if you bought items from a store in the state or locality, depending on the state or jurisdiction.
There are no income tax implications. The online retailer will charge the appropriate tax rates at the point of transaction, and file the appropriate returns with tax payments to the jurisdictions.
The initial compliance step is making the tax determination – knowing where to file and registering with the appropriate jurisdictions. These are processes that you have probably completed for the jurisdictions where you currently file.
Next steps are verifying the taxability of products and services and verifying the appropriate taxes and rates for new jurisdictions. Your organization may have internal resources that can address these tax compliance items, or you may seek assistance from retail service providers or third-party tax experts.
Assisting your retailers in managing these new compliance requirements is key to your business. Whether you want to provide internal assistance to support this process is dependent upon your business model. At the least, it may be useful to provide some form of assistance, even if it is just recommending service providers or providing links to sites that provide tax knowledge.
If you need outside assistance to support any aspect of this process, tax compliance service firms and software companies know the sales and use tax guidelines at the state and local level, and will be more than willing to assist in any capacity. Determining the process and technology to support your business model is key, and it is best to be proactive in implementing a solution.
You can help online retailers and retail service providers understand business impacts and the full jurisdictional compliance process, by providing guidance related to legislative changes, exemptions, tax rates, and filing procedures.
You know this business. It is a continuation of the existing sales and use tax compliance framework that jurisdictions have in place today. There may be an initial learning curve for some clients who will have to file in additional jurisdictions, so it will be important to make information regarding these new tax guidelines readily available.
These new tax rates and guidelines are set at the state and jurisdictional level. There is currently no planned federal or congressional involvement at this time. Many states have already implemented online retail tax collection requirements, and most others are in the process of doing so.
The effective date of new rates depends on the state and jurisdiction. Many states already have rates in effect through new or amended legislation, other states started October 1st, and the rest appear to be targeting January 1, 2019. Sales and use taxes are not new, and many states have been preparing for the change in the tax collection landscape brought about by Wayfair, so the legislative process appears to be routine.
Paying state and local jurisdictions doesn’t have to be complicated.
Anybill makes it simple.
Anybill can pay any tax jurisdiction through a secure, automated process, ensuring jurisdictions receive their payments and returns on time. Our solution is flexible, scalable, and leverages technology to provide an efficient tax payment solution.