The Sales Tax Landscape is Shifting – You’re Wise to be Ready

Written By: Melanie Beckett

from June 3, 2013

For years, online retailers have been exempt from collecting sales tax in states where they didn’t have a significant physical presence tying them to the state such as a warehouse or distribution center (also known as nexus). However, some believe that this has caused an unfair advantage over brick and mortar stores, since they can’t offer the same prices as online merchants.

On the other hand, it is argued that it would be too much of a burden for online retailers to comply with the thousands of sales tax changes, including rates, rules, and boundaries, that take place across the U.S. every year.  The U.S. Supreme Court’s decision in 1992, Quill vs. North Dakota, supported a catalog mail-order company who was cleared of sales tax liability due to the fact that no physical presence tied them to the state.  Even though e-commerce was in its early stages at that time, the decision has subsequently been applied to all remote sellers, including online retailers until recently.

The sales tax landscape is now changing again, and we want to help you be ready and stay informed about the Marketplace Fairness Act of 2013, which would allow states to require out-of-state businesses to collect sales tax, even when they don’t have a physical presence in-state. If the bill becomes law, states would gain authority to make remote businesses collect sales tax, some as early as 180 days after the bill’s passage.  The bill is now on its way to the House.

If you are a remote seller who is anxiously standing by, you are not alone.  Please download our whitepaper for information on how the MFA and Amazon Laws might affect you: “The End of Nexus – and Other Sales Tax Compliance Challenges”.