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Online Sales Tax - South Dakota v Wayfair Supreme Court Decision

30 Sep, 2019

UPDATED 2/21/24: The South Dakota v Wayfair Supreme Court decision ruled that businesses who reach an "economic nexus" are required to collect sales tax or report customer purchases even if the business has no physical presence within that state. Additionally, some states are imposing a Business & Operations Tax (an additional tax charged to businesses, not a sales tax collected from the consumer). It gets really complicated.

NOTE: We are currently unable to ship to the state of Vermont due to the state's Economic Nexus Sales Tax Laws and/or Notice & Reporting Requirement Laws. Although we have not met the state's sales tax threshold requirements (we are not required to collect sales tax), the states with Notice & Reporting Requirement Laws stipulate that online retailers like TheEpicenter.com must comply and report customer information and purchase details even if we are not required to collect sales tax. We believe that reporting to these states where we do not have a physical presence would be in direct violation to our commitment to customer privacy and our published Privacy Policy. Unfortunately, we have made the difficult decision to suspend orders for shipment to Vermont.

Post-Wayfair Economic vs Physical Presence

Prior to the 2018 Supreme Court decision, only businesses with a physical presence (physical nexus) in a tax-collecting state were required to collect, report, and remit sales tax. Now, Post-Wayfair, out-of-state businesses (remote sellers) are required to impose, collect, report, and remit sales tax to states where products are delivered (economic nexus) when a company's sales to that state reach or exceed the state's sales/transactions threshold. To make it even more complicated, the tax-collecting states and individual taxing jurisdictions within those states have different sales/transaction thresholds and every-changing tax percentages. At the time of this writing, there are 45 states (plus Washington DC), and currently more than 10,800 tax jurisdictions across the U.S.! Our company has one single location (Oregon).

Products may be taxable in one state/jurisdiction while non-taxable in others, and sales tax rates change on a monthly basis. To summarize, determining a company's economic nexus for each state, and correctly calculating, reporting, and remitting sales taxes is overwhelming for small businesses.

And then there's the "tax holidays" that must be built in to sales tax collection rules, which vary from state to state and jurisdictions within those states.

State Notice & Reporting Laws

Some states have also imposed "Notice and Reporting Requirement" laws which require out-of-state businesses to not only 1) send an annual notice to customers that they owe a use tax on purchased taxable items, but also 2) send an annual notice to the ship-to state with a report of customer information and a list of their purchases, even when the out-of-state business does not meet the state's sales tax threshold.

We take customer privacy seriously. To protect the privacy of our customers, we have made the difficult decision to suspend shipment of orders to several states with Notice & Report Laws until further notice. Additional states may be added or removed from this list if we reach a states' Notice & Report or Sales Thresholds or if the state updates their Notice & Reporting / Sales Tax Laws.

How the Decision Affects Small Businesses

For small businesses to comply, the cost is more than just consequential. It is a huge financial burden for a small business with limited resources to absorb the cost to manage and automate sales tax compliance.

For more information on the subject: