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How Should Businesses Respond to South Dakota v. Wayfair?

CPAs & Advisors

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The June 21, 2018 ruling on South Dakota v. Wayfair, Inc. will exert pressure on online sellers, as well as retailers that maintain physical locations in stores and businesses. As a result of the legislation, you may be required to collect and remit sales taxes regardless of a physical presence in the states where you do business. There is no one-size-fits-all approach. Accordingly, retailers should consider taking these seven steps in the wake of the South Dakota v. Wayfair decision:

1. Consult with your tax and legal advisors for guidance.

2. Review business activities to assess collection obligations.

3. Develop a plan for maintaining sales tax compliance.

4. Assess the possible effects on your business, including additional costs for technology updates and compliance measures.

5. Analyze the means for collecting taxes in the appropriate states, including bundling of taxable and nontaxable products.

6. Determine if the operation’s technology and personnel resources are sufficient to handle tax analysis and compliance, document retention and audits. If not, you may need to outsource some of these tasks.

7. Establish procedures for monitoring sales tax changes — such as tax rates, law changes and fulfillment practices — in various jurisdictions.

Need Help?

It will take time to unravel all the implications, and federal legislation may still be coming in this area. Each situation is unique. Contact your Yeo & Yeo advisor to determine how to proceed.

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