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On June 21, 2018, the Supreme Court of the United States in South Dakota v. Wayfair, Inc. ruled that physical presence in a state is no longer required of a company before a state can require the out-of-state seller to collect and remit sales and use taxes in that state. In the case of South Dakota, it will likely soon be able to enforce a Remote Seller Compliance law (SB 106) passed in May 2016.
SB 106 requires remote sellers with no physical location in South Dakota to remit sales tax and follow all procedures of the law, as if they have a presence in the state, if they meet one of two criteria in the previous calendar year or the current calendar year.
- The remote seller’s gross revenue of sale of tangible property, any products transferred electronically, or services delivered into South Dakota exceeds $100,000
- The remote seller has 200 or more separate transactions tangible property, any products transferred electronically, or services delivered into South Dakota.
How does this ruling affect you even if your sales to South Dakota do not meet the thresholds? A number of other states have already enacted similar laws. The majority of the other states see the opportunity to increase tax revenue without having raise taxes and are expected to enact similar legislation. This means that remote sellers previously not collecting sales and use tax will need to learn the ins and outs of taxing in many additional states with potentially thousands of different jurisdictions. Defining (and maintaining) the configuration to properly calculate sales tax for products and services sold to customers across the U.S. may seem like an insurmountable task. Fortunately, there are solutions available to automate sales and use tax calculation such as AvaTax, a cloud based tax solution available from our partner Avalara.
Contact Perficient to learn more about our Tax Technology solutions and how an interface to Avalara can be used to automate this complex, time consuming and difficult process.