South Dakota v Wayfair

The United States Supreme Court (SCOTUS) ruled in South Dakota v. Wayfair on June 21, 2018, that states can require sellers to collect and remit sales or use tax on sales delivered to locations within their state regardless of physical presence.

In its opinion, the SCOTUS explained that under the Commerce Clause there are “…two primary principles that mark the boundaries of a State’s authority to regulate interstate commerce.  First, state regulations may not discriminate against interstate commerce; and second, States may not impose undue burdens on interstate commerce…”

The SCOTUS indicated that South Dakota’s law “…affords small merchants a reasonable degree of protections.  The law at issue requires a merchant to collect the tax only if it does a considerable amount of business of in the State; the law is not retroactive; and South Dakota is a party to the Streamlined Sales and Use Tax Agreement…” South Dakota is one of the 23 states that are full members of the Streamlined Sales Tax Governing Board, Inc.

The SCOTUS pointed out various requirements contained in the Streamlined Sales and Use Tax Agreement that “…appear designed to prevent discrimination against or undue burdens upon interstate commerce…”  Specifically, it indicated that “…This system standardizes taxes to reduce administrative and compliance costs; It requires a single, state level administration, uniform definitions of products and services, simplified tax rate structures, and other uniform rules.  It also provides sellers access to sales tax administration software paid for by the State.  Sellers who choose to use such software are immune from audit liability…”

Remote sellers that are interested in learning more about the sales tax administration software paid for by the Streamlined states should review the information related to the Streamlined Sales Tax Certified Service Providers (CSP).   When contacting the CSPs to discuss the software and services they offer, make sure you tell them you are looking for the software and services provided under the contract they have with the Streamlined Sales Tax Governing Board (CSP contract).  This software and the related services described in the CSP contract is available for no charge to remote sellers in those states where the remote seller is a “volunteer seller” as that term is defined in Section D.2 of the CSP contract.