Will the Supreme Court's decision impact companies of all sizes?
The impending decision by the Supreme Court on economic nexus could impact many remote sellers, large and small. Tax expert and Partner at Peterson Sullivan LLP, Rachel Le Mieux, CPA, CMI, shares her insight on why even small remote sellers could potentially be impacted by the Supreme Court's ruling.
"Regardless of what happens in the Supreme Court, whether Wayfair prevails, or South Dakota prevails, this is going to impact companies of all sizes. This case is taking a huge chunk out of our concept of what creates nexus for purposes of being able to have to collect sales or use-tax in a state. We have approximately 22 states that have changed from a physical presence nexus standard to more of an economic nexus standard and required reporting. For instance, you don’t actually have to step into a state, like Washington, in order to be subject to Washington’s gross receipts tax. They have what’s called a factor-based nexus standard of $267,000 a year. If you have that many sales into the state, you’re going to be subject to their business tax, not necessarily collection responsibilities, but it’s something that companies of all sizes need to be aware of. Other states, like South Dakota and Colorado have reporting requirements based on the number of sales you make, not necessarily the total amount of sales that you make. You could make 200 sales into a state and be required to notify that state on what you sold and who you sold it to, so the state can go after the individuals that actually purchased your product. This is something that is going to impact the smallest company that sells over the internet, and the largest company that sells over the internet."