In a 5-4 decision yesterday, the Supreme Court determined that states can force online retailers to collect sales tax even in states where they have no physical presence – a major win for brick-and-mortar stores and state governments. For years, brick-and-mortar retailers complained that their E-Commerce competitors did not have to charge sales tax, while state governments were loosing billions a year in sales tax.

“The Supreme Court acted correctly in recognizing it’s time for outdated sales tax policies to change”, stated Matt Shay, CEO of National Retail Federation. “This ruling levels the playing field where all retailers compete under the same sales tax rules whether they sell online, in-store or both.”

WHAT DOES THIS MEAN FOR YOU? If you’re an online retailer and sell into a state where you don’t have any physical presence, you may be required to collect sales tax. Download the brochure to learn more!

1. Internet sales tax can be based on your revenue, not physical location. If you sell into states where you’re not registered to collect sales tax, the Economic Nexus can change your tax obligations based on your sales revenue and transaction volume, rather than if you have a physical presence in the state.
2. Online retailers collect sales tax if they sell $100K to South Dakota. To trigger Economic Nexus in South Dakota, an out-of-state online retailer must clear $100,000 in taxable sales or 200 separate taxable transactions delivered into the state within the current or previous calendar year.
3. Other states to follow. South Dakota was the first to get permission from the U.S. Supreme Court, but several other states with Economic Nexus rules will follow its lead (View U.S. states with Economic Nexus laws).
4. Sales tax and your retail solution. Managing sales tax is tedious and complex, especially when expanding into new tax jurisdictions. Fortunately, Avalara, the industry’s most trusted provider of sales tax compliance services, integrates with Stratus Retail to automate the sales tax process right from the point of sale.

Download FAQ to Learn More!