What Does Wayfair Mean to Businesses in General?

October 02, 2018

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Since nexus can now be established through economic contacts alone, many companies will find they have nexus in many more states than they did previously.  Businesses need to evaluate their nexus footprint and evaluate whether they need to file tax returns in additional states.

Transcript

Tim Schuster:Gary, what does the Wayfair decision mean to businesses in general?

 

Gary Bingel: Nexus may now be established through just having sales in a state or a certain number of transactions. As a result, it is highly likely most businesses will have a much greater expanded footprint as far as their tax filing requirements, nor they're deemed to have nexus. Generally, they're going to have to start filing returns in a lot more states and that's gonna include more registrations, as well as increased audits. There's going to be much more required of their systems in order to extract that information. And they're going to have to deal with doing business in many more jurisdictions.

About Gary Bingel

Gary Bingel's expertise focuses on state and local income taxation, and sales and use tax consulting. He has significant experience serving clients in the manufacturing, retail, pharmaceutical, biotechnology, technology and service industries.

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As a result of the Wayfair decision, states will be emboldened to enforce economic nexus not just in sales tax, but income tax and net worth taxes as well, and companies should prepare for additional audit activity and investment in their IT systems.
How Many States Does Wayfair Apply To? When Does it Kick In?

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What Should My Business be Doing in Light of Wayfair?

Businesses need to determine how Wayfair may apply to them by evaluating their nexus footprint, as well as where they should be filing based on any threshold (dollar threshold or transaction threshold) that is met.
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While many view Wayfair as applying only to internet retailers, Wayfair extends beyond e-commerce to service companies and software companies with nexus in more than one jurisdiction, increasing record keeping and exemption certificates.
What is the Wayfair Decision?

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The Quill decision was the 1992 US Supreme Court decision out of North Dakota which held that some type of physical presence was required in order to create nexus with a state for sales tax purposes.