In late June, the Supreme Court of the United States - in a 5-4 decision - ruled in favor of South Dakota that states may charge tax on purchases made from out-of-state sellers, even if the seller does not have a physical presence in the taxing state. This decision is a drastic departure from the high court's previous interpretation of The U.S. Commerce Clause in this area and in fact overturns Quill Corp. v. North Dakota. Such a broad expansion of nexus has out-of-state retailers concerned about a new set of obligations with regard to sales tax collection and reporting. This ruling is just the latest chapter in the story of sales tax nexus, which has been heating up since states found themselves starved for revenue during the recession of 2008.
Now that states have achieved a federal legal precedence with retailers, manufacturing businesses are becoming concerned that the next wave of expansion may impact them. Last year, before this landmark ruling, our tax-expert partners at Avalara put together a white paper titled Nexus and Multistate Sales Taxes: Complex Concerns for Manufacturers. Now that South Dakota v. Wayfair has been decided in favor of the tax collectors, this resource is more relevant than ever. Here are some things you can expect to learn when you download it:
- Core activities of manufacturing, such as installation, drop-shipping and repair, may trigger tax obligations to states other than ones in which the manufacturer has a physical presence.
- Nexus can be prompted by making sales into a state, even without physically entering that state.
- Material sourcing rules are different from state to state, as are rules for interstate and intrastate transactions. They also tend to change relatively frequently.
Download Nexus and Multistate Sales Taxes: Complex Concerns for Manufacturers
If you're a manufacturer, download this resource and learn what changing sales tax laws might mean for your business. And learn how sales tax automation can help avoid the pitfalls, letting you focus more on your operations and less on the ever-changing sales tax requirements.