State Budgets Benefiting from Wayfair Act
In June of 2018, the U.S. Supreme Court cleared the way for states to collect sales tax from online sellers in their South Dakota v. Wayfair ruling. States have been busy since the court’s decision, with 42 of 45 states that collect sales tax enacting laws or regulations requiring remote sellers to pay sales tax.
This new revenue stream, combined with an increase in consumer spending, is helping bolster state revenue coffers. According to the latest data from the National Association of State Budget Officers (NASBO), 32 states are collecting more than they anticipated. The tax is outperforming budget forecasts by 1.4 percent, or $3.6 billion. In total. Sales tax revenue is projected to grow by 3.5 percent in fiscal 2019, an increase NASBO attributes at least in part to the states’ online sales tax collections.
Now as the dust is starting to settle after the flurry of states enacting laws and other regulations, the next logical step many states will likely take is to modify the legislation to make their process for collecting online sales tax more efficient. It is expected that this will result in states changing how they have defined economic nexus, or the amount of business transactions and/or revenue that triggers whether or not a remote seller must remit sales tax.
Keeping up with all these changes across multiple states can feel mind-boggling. One way to stay ahead of these rapidly changing state laws is to think about automating how you collect sales tax. If you can answer “yes” or “I don’t know” to any of the questions below, your online business could be impacted by the changes made to state sales tax legislation:
Do you currently sell either online or through mail order?
Do you sell in multiple taxing jurisdictions?
Do you have click-through nexus in multiple states?
Is your business registered in all states where you currently do business?
Do you manage monthly returns manually?
Not sure what to do next? Our SALT (sales and use tax) team can help you navigate the ever-changing sales tax landscape. Contact Fleming Advisors to see how we can help you.