Sales Tax Filing Obligation without Physical Presence: New Reality for Retailers

Can states ignore a U. S. Supreme Court decision in order to raise additional tax revenue? They can certainly try.  In fact, a handful of states are now doing just that in disregarding Quill Corp. v. North Dakota, 504 U.S. 298 (1992) and asserting a sales tax collection and remittance responsibility for out-of-state sellers. The list of states is expected to grow. 

Under Quill, in order for a state to require an out-of-state seller to collect sales tax from an in-state customer, the seller must have physical presence in the state. Currently, six states have adopted sales tax economic nexus standards, ignoring the physical presence standard. However, in one of the states —  South Dakota — the sales tax economic nexus law was recently struck down in court (See: South Dakota v. Wayfair, Inc., et al, S.D. Cir. Ct., No 32 Civ. 16-000092, 3/6/17), pending an appeal to the state’s highest court.