Back in June, the US Supreme Court effectively brought on the end of an era. For years, eCommerce brands selling across state lines enjoyed an advantage over physical retailers in other states. Thanks to a case from the pre-eCommerce age, companies without a physical presence in a state weren’t obligated to collect taxes from customers that made purchases in that state. That all changed with South Dakota vs Wayfair. This week, eCommerce tax went into effect in ten states.
eCommerce Tax Statutes Active in 10 States
Internet tax on cross-state purchases seems inevitable, despite proposed legislation aimed at slowing down implementation. For now, with the Supreme Court’s ruling, there’s nothing to prevent states from applying sales taxes to remote online purchases. Currently, 32 states have some requirement for remote sellers to collect sales taxes. As of October 1, eCommerce tax statutes went into effect in 10 states. These include Alabama, Illinois, Indiana, Kentucky, Massachusetts, Minnesota, Michigan, North Dakota, Washington and Wisconsin.
If you’re an online retailer selling to customers in those 10 states, you may be responsible for collecting and remitting taxes there. With two more states putting eCommerce tax statutes into effect soon, multistate remote selling will get more complicated. Not only does each state set different tax rates, but local taxes also may come into play. Additionally, many provide exemptions based on product type and set rules for when the sales tax applies. All that means that interstate retailers have to stay on their toes. They have to charge the correct tax rate to each sale, file appropriate tax returns and remit to applicable tax authorities. In other words, it’s time to have a long talk with your tax consultant.