Rules for state sales taxes in the U.S. were changed dramatically in 2018 and this could affect companies selling into that country. As of 1992 the Quill court case established that companies selling into a state did not have to pay sales taxes if they had no physical presence. Since that time the Internet has become a major way for items to be sold with the emergence of sales organizations like Amazon and Wayfair. Several states, including South Dakota, tried to get around the 1992 case. They said if a company sells more than $100,000 or more than 200 transactions into the state per year, then the state will collect sales taxes regardless of physical presence.

Wayfair is a web-based furnishing retailer. In the initial court case between South Dakota and Wayfair, the U.S. Supreme Court sided with Wayfair since this had been the law since 1992. However, South Dakota petitioned the Supreme Court and on June 21, 2018, a 5-4 decision said physical presence was no longer required.

Prior to that time, state sales taxes were based on vendors having an in-state physical presence. So Wayfair lost its case against South Dakota and physical presence was no longer required for jurisdictions to charge vendors sales taxes.

In the U.S. sales taxes can be charged by states, counties, parishes, and cities. This process will become very complicated. At present 27 states require sales taxes to be paid if the vendor has sales of over $100,000 or 200 transactions per year.

Therefore, if your company or your clients’ companies sell products into the country, sales taxes may now have to be paid to each state or jurisdiction. At the same time, a wholesaler who doesn’t sell to consumers will still need the required paperwork to confirm that they don’t have to pay sales taxes.

Some states are also considering charging income taxes on these sales, which means you will need to know the requirements and comply.

To make matters worse, many of these jurisdictions have become aggressive to ensure they collect all required taxes and no one sneaks through the cracks. If you get caught before complying there will be significant penalties and interest charged on the unremitted sales taxes.