Tax executives and professionals in companies with remote sales are diligently working to calculate the potential impact of the Supreme Court’s June South Dakota v. Wayfairdecision, which allows states to require such businesses to collect sales tax on out-of-state transactions. Regardless of where your company is based (non-U.S. remote sellers are also affected), it could now be required to collect sales tax for online purchases. If it is impacted, you’ll want to check out the new Vertex webcast, Supreme Court S. Dakota v. Wayfair Decision … Now What?
The discussion is chaired by Dave Pelton, Vertex product line leader for transaction tax. He’s joined by two more Vertex experts – Michael Bernard, chief tax officer for transaction tax, and Nancy Manzano, director in the chief tax office – and by Rick Heller, managing director in Deloitte Tax’s technology, media and telecommunications practice.
In my previous post, I covered two topics in the webcast that will likely be uppermost in tax execs’ minds: states’ responses to the ruling and the concern that some jurisdictions could impose new requirements retroactively. Three other crucial questions were also covered in the discussion:
How will Congress respond, if at all? Predicting Congressional action is always risky, butseveral bills are currently in the works that could provide guidelines or limits for Wayfair-type legislation or require simplification similar to the streamlined sales tax (SST) project.Much will depend on the effectiveness of lobbying efforts, but the response from the industry so far has been mixed. Some online sellers have announced that they will “voluntarily register” in a number of states. Others have expressed their opposition to the Wayfair decision and are encouraging their customers to contact Congress and put protections in place for online purchases.
How will the decision affect international businesses? While U.S. states have the right to require foreign companies to collect and remit sales tax, Wayfair raises the question of how states would be able to enforce those rights, since they don’t usually seek to enforce judgments overseas. The panel members point out several ways states can address compliance, such as by pursuing registered agents of the foreign company or putting a tax lien on U.S. bank accounts.
What are the implications for operational and systems readiness? The time to act is right now. Companies should review their nexus positions, the taxability of their products for retail sales and their obligations to collect exemption certificates for wholesale transactions. “If you can start collecting and remitting to reduce your potential uncollected liability, it's a good idea to come online as soon as you can in a number of these states that are becoming active each month,” says Rick.
Nancy, Michael and Rick discussed several other implications of the Wayfair decision and answered viewer questions during the webcast as well. I invite you to listen to see how your business could be impacted and how to prepare.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.