South Dakota v. Wayfair Inc.
- Date:October 16, 2018
- Author(s):
- Krista Tedder
- Ian Benton
- Report Details: 3 pages, 0 graphics
- Research Topic(s):
- Small Business
- Digital Banking
- PAID CONTENT
Overview
As digital commerce has developed over the past 30 years, the Supreme Court of the United States (SCOTUS) has twice ruled on the issue of taxation. Most recently, a June 21, 2018 ruling in South Dakota v. Wayfair Inc. now allows a state to collect sales tax on goods and services sold to its residents from out of state. This decision has the potential to dramatically affect e-commerce and m-commerce merchants across the country, especially small business owners and sole proprietors with limited access to tax expertise.
In 1992, the SCOTUS decision in Quill Corp. v. North Dakota prohibited states from collecting sales tax from e-commerce unless the merchant had a “sufficient physical presence,” also called nexus. States were left to develop laws defining principles for establishing nexus, which 45 states and the District of Columbia have enacted.
With the previous decision overturned, states are now able to impose sales tax obligations on out-of-state merchants selling goods and services online to state residents. Further complexity may be added with local and city taxes.
Book a Meeting with the Author
Related content
Fintechs and Neobanks Upend the Business Banking Landscape with Charter Applications and Bank Acquisitions
A wave of bank acquisitions and charter applications is upending the competitive landscape in small business banking. In September 2026 alone, Revolut received conditional approval...
Raising the Ceiling: How Banks Can Retain Business Customers As They Grow
Small businesses are developing more sophisticated financial needs earlier in their growth, but traditional banking models still force them into a choice between small business and...
The Small Business Cross-Border Payments Opportunity
Cross-border payments are not just the domain of multinational corporations. Small businesses routinely buy inventory overseas, pay international contractors and service vendors, s...
Make informed decisions in a digital financial world