On Thursday, June 21, 2018, the United States Supreme Court overturned the physical presence standard imposed by the Court in prior cases, Quill v. North Dakota and National Bellas Hess, Inc. v. Department of Revenue of Ill.
This ruling in favor of the state of South Dakota has cleared the way for states to impose sales and use tax collection requirements on out of state sellers. The court based its decision in part on the fact that the physical presence requirement established under the previous cases created an unfair advantage for out of state retailers with no presence in the state.
With this ruling, states that have passed economic nexus statutes can begin to enforce the requirements for companies to collect sales tax on all sales within the state. Currently the following states have economic nexus provisions:
Alabama
Connecticut
Georgia*
Hawaii
Illinois
Indiana
Kentucky
Louisiana
Maine
Minnesota
Mississippi
North Dakota
Oklahoma*
Pennsylvania*
Rhode Island*
South Dakota
Tennessee
Vermont
Washington*
Wyoming
*States currently have the option to collect sales tax or comply with notice and reporting requirements.
Companies need to review their sales positions within each of these states and determine if registration and collection is required.
Cherry Bekaert’s State & Local Tax professionals are ready to assist you with reviewing your company’s current situation and advising you on the application of the particular nexus standards within each of these states.
We believe that most, if not all, of the remaining states will enact a form of economic nexus in the near future. We will be developing additional information to help companies make sure they are in compliance.
