This decision has significant implications for some large internet retailers, but also tens of thousands of small to medium size retailers.

On June 21, 2018, the U.S. Supreme Court in the case of South Dakota v. Wayfair rejected a half century of precedent and killed the physical presence test for sales/use taxes. (See our previous Alert.) This historic change in state tax law means internet, TV, radio and catalog retailers can now be subject to thousands of different state and local sales/use taxes across the country, without having any office, employees, inventory or any other physical presence within the taxing jurisdiction. 

This decision has significant implications for some large internet retailers, but also tens of thousands of small to medium size retailers, possibly forcing many out of business, limiting their sales to certain states or subjecting them to tax collection requirements, monthly return filings, document, creation and retention requirements, audits, and possibly fines and penalties for mistakes or inadequate compliance. Therefore, retailers and many service providers that offer for sale their products or services, including digital products and software, for delivery throughout the country should now be cognizant that they may be subject to a multitude of state and local sales/use taxes on their sales.

For More Information

If you have any questions about this Alert, please contact Stanley R. Kaminski, any other member of our State and Local Tax Practice Group or the attorney in the firm with whom you are in regular contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.