Sales Tax Changes After South Dakota v. Wayfair State Law Survey

Summary

With the advent of the internet and its increasing use for electronic transactions and communications, online retailers have conducted an increasing amount of business without having a physical presence in many states. This has given rise to an increase in the amount of taxes that could, under traditional concepts of nexus, remain uncollected. Although tax may be owing on the transaction, the states have been unable to impose collection and remittance obligations on out-of-state sellers with no physical presence in the state. That has all changed with the enactment of laws requiring out-of-state sellers with economic nexus and/or affiliate relationships in the state to collect and remit taxes on in-state transactions, even where the seller does not have a physical presence in the state. In other words, the issue becomes the ability of states to require internet sellers that reach out to in-state consumers to assess, collect, and remit sales taxes to the state.