The New Normal in Sales Tax Regulatory and Enforcement Trends

Sales and use tax compliance has never been simple. But the combination of post-Wayfair rule changes, an onslaught of digital tax proposals, and a return to aggressive audit enforcement has created a uniquely complicated environment for tax professionals.

Nexus rules keep moving

All states with sales tax laws have now adopted economic nexus standards following the 2018 Wayfair ruling. But that doesn't mean the rules have settled. States continue to revise their definitions of economic nexus, particularly transaction-count thresholds, which several states have already eliminated. Physical presence remains a relevant nexus factor too, and local jurisdictions add another layer of complexity that businesses selling across state lines can't afford to overlook. Meanwhile, similar remote-seller rules are expanding globally, with new VAT requirements affecting e-commerce sales to consumers in the EU, UK, Australia, and beyond.

Digital taxes are coming in three forms

State legislatures are actively pursuing three types of digital tax legislation: taxes on digital products like streaming services, taxes on the sale of personal data and analytics, and digital advertising taxes. Maryland's digital advertising tax is already working through the courts, and its outcome could have broad implications. For tax teams, two immediate compliance challenges stand out: accurately applying taxes when digital services are bundled together, and correctly sourcing transactions to the right jurisdiction to avoid double taxation.

Audits are back, and they're focused on Wayfair compliance

Sales tax audits have returned to pre-pandemic frequency and intensity. States including Illinois, Maine, New York, Wisconsin, and Washington are actively pursuing remote sellers for back taxes tied to economic nexus registration dates. Auditors are also expanding their scrutiny beyond remote sellers to examine tax exemptions more closely. The format of audits is changing too. Virtual audits using e-rooms and electronic data exchanges are now common, even as other pandemic-era practices wind down.

Building the right foundation for what comes next

Staying ahead of these challenges requires the right combination of talent, technology, and trusted external relationships. Accounting firms play a critical role as advisors, helping businesses identify risk and future-proof their compliance programs. The CPA.com and Vertex Firm Advisor Program brings together tax technology with practical expertise to support sales and use tax compliance across thousands of jurisdictions. As the regulatory environment continues to shift, those relationships and the tools that support them will only grow more important.