For the last 26 years, Quill v. North Dakota acted as a default tax protector for out-of-state sellers and web-based businesses that had no physical presence in the jurisdictions where they sold and shipped products. As such, Quill provided that no state could compel a business to collect and remit sales tax for sales in that state unless the seller had a physical presence in the taxing jurisdiction. Thus, sellers without that presence who merely shipped goods into a consumer’s state – often ordered from a website or catalog – generally did not collect and remit sales taxes in that state. No more.
Yesterday, the Supreme Court in South Dakota v. Wayfair ripped up Quill’s physical presence protections when it held that mere economic or virtual contacts with a consuming state are sufficient for the state to require out-of-state sellers to collect and remit sales taxes. These sellers are now potentially at the mercy of each state (and district and territory) where their customers reside; early estimates point to retailers needing to accommodate between 10,000-12,000 unique taxing jurisdictions.
Download the full Burr Alert, “Supreme Court Unleashes the Tax Kraken”