Ecommerce is booming and many states are complaining about declining sales tax revenues due to the increase in online sales.
For over 25 years, we've generally not had to pay sales tax when we buy products from companies that have their nexus outside of North Carolina. And, if you have a sales business in North Carolina, you didn't have to collect sales tax for other states. Now, however, all that is changing.
Because of recent court ruling in the case of South Dakota v. Wayfair, Inc., the issue of nexus is losing relevance. The new rules that are being adopted by many states say that they want you to pay/collect sales tax for every state when the vendor has $100,000 sales in a particular state or 200 individual sales transactions in a particular state.
The rules created an extra sales tax burden for ecommerce consumers and vendors. The burden for small business sellers is especially egregious. Small companies don't generally have the technology to track the thresholds for every state. And, every state applies sales tax in different ways to different products and services and with differing rates. It will be very easy for small retailers with online sales to find themselves out of compliance and subjected to substantial sales tax penalties.
For consumers, expect more and more online retailers to charge you sales tax.
This ruling is a huge tax grab, and many small businesses will suffer and struggle with compliance.
If you have out of state sales that may be affected by this new law and have questions, please contact us.