Change to Sales Tax Laws

Change to Sales Tax Laws

The Supreme court has overturned a longstanding rule that states can collect sales taxes only on transactions if the retailer has a “bricks and mortar” presence in that state. The main reasoning behind the decision is the interpretation of “physical” presence  which some states argue goes beyond bricks and mortar.

While the “nexus” rule meant internet based businesses such as Amazon and Wayfair are already collecting taxes where they have physical operations, this new ruling means internet only eCommerce business within the US could have to collect tax on every order according to each state’s tax rules and rates.

Given tax rates can vary by zip code as well as type of product (food, clothes etc.) being ordered, it is not a simple thing to manage and will likely force more and more small eCommerce businesses to use third party tax APIs to manage what will be a complex process.