South Dakota v. Wayfair — five years later

On June 21, 2018, the U.S. Supreme Court decided South Dakota v. Wayfair, Inc. in favor of South Dakota’s imposition of sales tax collection obligations on remote sellers meeting economic thresholds based on in-state receipts or transaction volume. In this landmark decision, the Court overturned the “physical presence” requirement for sales tax nexus set forth in National Bellas Hess, Inc. v. Department of Revenue of Illinois in 1967 and subsequently affirmed in Quill Corp. v. North Dakota in 1992.

This column provides an overview of the expected and unexpected tax impacts of the Wayfair ruling, as well as the operational implications for taxpayers. From states applying Wayfair to other types of taxes, to potential sales tax overpayments as a result of vendors operating in new jurisdictions, this column walks through what taxpayers are experiencing five years later and how the changing landscape may impact businesses going forward.