State Tax Guidance on Remote Sellers Post-Wayfair: State Law on Economic Nexus, Compliance Challenges

The U.S. Supreme Court’s decision in Wayfair v. South Dakota, overturning Quill v. North Dakota, instantly changed the landscape of nexus and state taxation for remote sellers and other companies that carry on an interstate business. Under certain circumstances, states may now require a remote seller of taxable goods and services to collect and remit sales tax despite the seller’s lack of a physical presence in the state, forcing tax professionals and advisers to acquire updates on recent state laws and state tax agency announcements, analyze those updates against the background of the new constitutional test and develop tax planning methods to avoid unintended tax liability for taxpayers.

In eliminating the physical presence rule, but not establishing a specific standard for substantial nexus, the Court explained that existing Commerce Clause doctrine would apply to address taxpayer concerns regarding any undue burdens created by state tax laws. The Court did not address the issue of retroactivity and other related challenges but permitted states to enforce existing laws and adopt new economic nexus provisions with varying thresholds to leverage additional tax revenue, provided there is not an undue burden on interstate commerce. The majority of states (but not the largest states of California, Florida, New York and Texas) have already passed and are implementing economic nexus provisions as a result of the Wayfair decision to collect sales tax on sales of taxable products and services delivered to customers in that state.

The ruling affects all sellers of taxable goods and services who make sales into a state where they lack physical presence. Tax professionals and advisers must be aware of myriad challenges facing multistate businesses and monitor client sales activities by state to determine whether they have sales tax nexus and identify available methods to minimize state tax liability. There is also a possible spillover effect of the decision on other state taxes.

Listen as our panel discusses recent state laws and on economic nexus for collection of sales tax, the impact on other state taxes, methods of addressing state tax compliance challenges, and offers vital tax planning considerations for remote sellers of taxable goods and services.

1. Detailed analysis of South Dakota’s economic nexus law
2. The impact of Wayfair on multistate tax planning and reporting
3. Recent state adoption and enforcement of economic nexus and collection of sales tax
4. Principal considerations and planning strategies to minimize state tax risks

The panel will discuss these and other priority issues:

• The impact of Wayfair decision on state sales tax regulations and key takeaways for tax professionals
• Recent state legislation and individual state remote seller requirements
• The Wayfair decision’s implications for other state taxes, including gross receipts taxes and income taxes
• Monitoring sales activities of remote sellers to avoid or minimize unintended tax liability
• Key considerations and planning strategies to minimize state tax risks

Learning Objectives

After completing this course, you will be able to:

• Recognize the economic nexus rules in use in various states
• Identify various state notification and reporting obligations of out-of-state taxpayers
• Acquire planning techniques in minimizing state sales tax liability for multistate activities

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, dealing with complex multi-state sales and use tax collecting and reporting; supervisory authority over other preparers/accountants. Knowledge of the U.S. Supreme Court's ruling in Quill v. North Dakota and South Dakota v. Wayfair, Multi State Tax Commission model nexus standards, and the primary nexus approaches used by most states.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).