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Wayfair: 10 Things You Need to Know

09/07/2018  |  By: Brian Strahle, Senior Manager, State Tax Recovery & Risk Management

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You have most likely heard of the Wayfair, Inc. sales tax case issued on June 21, 2018, by the U.S. Supreme Court. Here are 10 things you need to know:

  1. This case impacts companies of all sizes and every industry. It impacts any company that has customers in a state in which they have NOT filed a sales tax return and/or collected sales. It will also impact each company’s purchases (accounts payable).
  2. The Wayfair case removed the requirement that a company must have a physical presence before being required to collect sales tax on taxable sales.
  3. 34 states have enacted or will enforce sales tax economic nexus thresholds similar to South Dakota’s.
  4. Enforcement dates range from July 1, 2018, to September 1, 2018, October 1, 2018, and January 1, 2019.
  5. If a company determines it needs to file/collect sales tax in new states, then they will need help with taxability, exemption questions and possibly sales tax software selection/implementation or sales tax compliance outsourcing.
  6. Just because a company is required to file a return, doesn’t mean what they are selling is taxable. Each state’s rules are different, so an item that is taxable in one state may not be taxable in another.
  7. Companies may have to get exemption certificates from more customers in more states.
  8. This will also impact a company’s purchases. As more and more vendors start charging sales tax, companies will have less of a use tax requirement. There may also be taxability and exemption conflicts with vendors.
  9. Your company may now need to file sales tax returns in more states, determine taxability, acquire or enhance its compliance software and implement new processes.
  10. We can help you determine what changes, if any, you need to make, and how to do it so you can move forward. Contact your LBMC client service partner or Brian Strahle, Senior Manager, State Tax Recovery & Risk Management, at brian.strahle@lbmc.com or 615.309.2797 for your custom Wayfair Diagnostic. This service is provided for a flat fee.

LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.

Posted in: Tax