JVC Discusses the Wayfair Supreme Court Case
Tuesday, April 30, 2019
What is Wayfair?
The United States Supreme Court made a decision in South Dakota v Wayfair, Overstock and Newegg that impacts the jewelry industry (and, actually all industries) last summer.
The case, which was decided at the federal level, redefined a very important sales tax that impacts every state. The court decided that all U.S. states could now legally collect taxes from online retailers considered to have “economic nexus.” “Economic nexus” just means that businesses can now be taxed based on whether they have an economic presence in a state directing economic activity in the state, or by having income from sales to customers in the state. This differs from before when you could only be taxed for having a physical presence within a state.
While the Supreme Court case specifically dealt with South Dakota sales tax laws, the decision extends to all states and therefore individual states are now in the process of creating their own laws that meet the Wayfair outcome, so far 37 states have enacted new laws that might impact your business. If you sell to customers in another state, you need to be aware of these changes and take the steps to collect the correct sales tax.
What does this mean for my business and how do I use the JVC Wayfair Chart?
States have been busy enacting legislation regarding online sellers in order to reflect the Wayfair outcome. The JVC has created a chart for you to make this evolving issue easier to understand. It is current to the various advancing laws across all states as of March 2019. You will see that the chart has been divided by each state, detailing whether or not they place a tax on online sellers.
If your state does subject online sellers to a tax, you will see that the following columns consider the factors needed to establish ”economic nexus"—namely the sales and transaction thresholds. Therefore you will not automatically be taxed for selling your goods online in a state. Rather only if these factors are satisfied can an online seller in a state be charged sales tax on these sales. Aside from considering these two factors, which are occasionally not both needed to be satisfied, one is also required to take note of the time period in which the factors are met; this also effects whether “economic nexus” thresholds are met.
This case directly affects you if your business relies on online sales in various states across the U.S. If you are an online retailer, it is necessary for you to take note of the new laws and make sure your business complies with them.
In dealing with the chart, first take note of the state you are in. If your state does not have “economic nexus” laws, then you are in the clear. Second, if your state does have such a law, then take note of the requirements applied within the state. For example, if you are in Oklahoma and make $9,000 in gross revenue within a 12-month period, you do not have to worry about the new laws in place. However if you make over $10,000 within the same time period, you will need to comply with the new law enacted as of July 1, 2018. Therefore, only if the Wayfair outcome affects you do you need to take note of this chart and its contents.
States have yet to offer solid guidance relating to the rate of sales tax to be remitted to the state. Some, if not all states, are still dealing with these questions. We will continue to update you as the matter unfolds. If you have further questions pertaining to this or any other uncertainties relating to the Wayfair updates, do not hesitate to reach us at email@example.com. Get this information directly by becoming a member of the JVC—we are a member supported organization working on behalf of the entire industry. If you’re already a member, thank you for your support.