Whether or not you’re an online retailer, you’ve probably heard the Supreme Court recently ruled states now have the right to collect sales tax from online retailers.
South Dakota v. Wayfair, Inc. will likely have ripple effects in the months ahead as retailers, legislators, and service providers such as Lightburn quickly adapt to the changing face of ecommerce.
It’s not hyperbolic to say this ruling has the potential to dramatically affect the future of ecommerce. We’ve been fielding questions from many of our ecommerce clients and wanted to share our thoughts on this ruling and what it can mean for you going forward.
Previously, states could only collect sales tax on retailers who had a physical presence in said state. That’s no longer the case. This ruling means online retailers will now be required to collect sales tax from customers in individual states, not just the states in which they have a physical presence.
Does this just even the playing field?
Not exactly. Larger retailers such as Target or Amazon will be mostly unaffected because they likely have a physical presence in most states and are already paying these taxes. That means small and mid-sized online retailers have one less thing differentiating them from the big guys, so we’ll need to get smarter and more aggressive about finding other sales tactics to set our ecommerce clients apart from the crowd.
So now I have to collect sales tax in all 50 states?
How can I comply effectively?
Who benefits from these changes?