When the Supreme Court decided South Dakota v. Wayfair in 2018, small business owners everywhere may not have known what was to come. And what was to come was a gigantic headache for those who do business with customers in many states. Unfortunately, many on the hook for handling this new requirement don’t even know it’s their onerous responsibility.
What happened was this: the Supreme Court rejected the physical presence test for sales tax, whereby remote companies previously didn’t have to collect or pay sales tax in states where they weren’t physically located. The decision was meant to bring a certain tax symmetry to online and in-person retailers. Now, e-retailers have to collect sales tax for potentially any state in which they do business, or apply for an exemption. For businesses that use third party digital platforms to sell goods, such “market facilitators” must sort out the taxes for those sellers.