With South Dakota vs. Wayfair on the docket for the Supreme Court this month, the Court is expected to agree with South Dakota that it is time for the internet sellers to operate like brick & mortar stores and collect sales tax on all sales. However, there has been growing noise from some politicians and retailers opposing the possible decision.
For some politicians, they believe the determination of sales tax collection is a legislative matter. The Washington DC publication, The Hill, wrote on April 4: “A group of lawmakers that includes House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and Senate Finance Committee ranking member Ron Wyden (D-Ore.) said in their brief that ‘it is for Congress — not the Solicitor General, this Court, or the States — to decide the best interstate taxation scheme for Internet sales’.”
If the Supremes rule in favor of the states (in this case, South Dakota), what does it mean?
The good: States will see an influx of sales tax revenue.
The bad: If your business sells products online, you’re about to experience a tsunami of state regulations, compliance challenges and upheaval to your collections and recordkeeping.
The solution: Immediately develop a strategy for collection and compliance that allows your business to be prepared, in compliance and functioning smoothly as each state determines its compliance rules.
How: Understand the sales tax rules in every state.
Even large businesses do not typically have a sales tax expert on staff that understands the nuances of sales tax matters in all states. The sales & use tax group at Smith & Howard, led by Tim Howe, is familiar with each state’s existing sales tax guidelines and will be communicating with resources in each state as they determine their approach to the anticipated ruling. Our team often functions as the “sales tax department” for businesses – to help them develop and execute a sales tax strategy.
There is the distinct possibility that Congress will attempt to make this a legislative, rather than court matter. We’ll wait and see what happens.
It’s important to get a head start on this emerging business challenge. Regardless of what you sell or where you sell it, Smith & Howard can help. Please call Tim Howe at 404-874-6244 or fill out the contact form below and he’ll get back with you quickly.