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Be Aware - Sales Tax is the Wild West Again

 

Last month, the Supreme Court ruled that the states and localities can collect sales tax from customers that buy goods over the internet even if the vendor does not inhabit that jurisdiction.  This is even the case if the vendor has no physical tie or “nexus” to the state.  The impact will be profound as this will mean that states will now be able to collect billions of dollars from the sales of product over the internet that they could not touch before this ruling.   

Prior to this decision, a very famous court case entitled “Quill” allowed states to collect sales tax if a vendor had a presence in a state.  The new ruling changes those rules and the games that states will play.

But be aware, what the press is not reporting is that this new ruling impacts other types of businesses beyond online retailers – it also impacts software companies or SAAS companies that sell into other states as well.   What many of us at Katz, Nannis + Solomon, PC believe, is that more and more states will now adopt an ever growing practice of setting dollar volume thresholds which, if a company or vendor exceeds, will require them to begin to charge sales tax to those in-state customers.  As an example, South Dakota requires companies to collect sales tax from its residents if the vendor has more than $100,000 in sales in the state (even with no nexus!).

Rest assured our KNS tax professionals are actively monitoring these changes and the impact to all our Clients.  Peter Harris, one of our tax professionals that focuses on state and local tax issues, is swamped with client questions and projects as a result.  Make sure you know how this new ruling impacts you and your company and know what states require you to collect taxes now.  Please call us at 781-453-8700 for more information.

Jeffrey D. Solomon, C.P.A., C.V.A., is the Managing Partner at Katz, Nannis + Solomon, P.C. If you have any questions or would like to speak with one of our tax professionals, please contact our office at 781-453-8700.

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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