Three years after Wayfair - now what?

What is it?

In the landmark case of South Dakota v. Wayfair, the US Supreme Court overturned the Quill physical presence standard, finding it “unsound and incorrect.” The Court noted that South Dakota law includes several features intended to prevent undue burdens on interstate commerce, which include no obligation to retroactively remit the sales tax. Since the June 2018 decision, all states that impose a statewide sales tax have adopted economic nexus standards as well as collection responsibilities for marketplace facilitators. (In 2021, Florida and Kansas adopted legislation, and Missouri’s legislation is pending with the Governor.)

Why is this relevant and what is the potential impact?

  • Almost all states have expanded their nexus standards in the wake of the decision to require sales and use tax compliance for companies based on their in-state receipts or transactions.  Remote sellers and marketplace facilitators must monitor these changes, their effective dates, and impact on their compliance obligations.

  • Companies must determine what goods and services are taxable in the new filing jurisdictions and implement appropriate procedures to manage the increased number of filings.

  • Companies will not only have to consider where they have additional filings and the potential ASC 450 impacts, but they will also need to consider updating their systems and infrastructure with tax software, analytics, RPA/BOTs to address the impact of economic nexus and marketplace facilitator requirements on a go-forward basis.

  • The Wayfair decision and continuing state legislative enactments and rule changes may also impact companies involved in M&A transactions with prior sales tax exposures and/or escrow accounts.

  • Additionally, although Wayfair primarily focused on sales taxes, there may be broader state tax nexus implications related to other taxes, such as income taxes.

Types of companies who may be impacted

  • Retail and consumer markets

  • Manufacturers/wholesalers

  • Technology: e-commerce retailers, digital service providers, software sellers, online gaming or similar sellers of electronic products

  • Companies with merger and acquisition activity

  • Inbound retailers and private companies

  • “Small business”

  • Private equity or portfolio companies

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Contact us

Tina Skidmore

Tina Skidmore

National Practice Leader, State and Local Tax, PwC US

Brad Danton

Brad Danton

Principal, Indirect Tax Leader, PwC US

Eric Burkheiser

Eric Burkheiser

Partner, Direct Tax Strategy Leader, PwC US

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