'Physical Presence' Test Is Gone, but Uncertainty Remains for Companies After Wayfair Decision
The Supreme Court's ruling in South Dakota v. Wayfair removes the physical presence test for state sales and use taxes, and while it has provided some clarity for retail legal departments, it hasn't answered everyone's questions. Online retailers now must comply with thousands of jurisdictions' tax laws, particularly difficult in jurisdictions that have not adopted interstate agreements.
And, as Waller's Chris Wilson notes, "the smaller the business, the harder the hit in terms of compliance cost burdens." But, Chris told Corporate Counsel that there are actions retail companies' legal departments can take.
"They need to go back to the drawing board and look at the due process arguments—ask, ‘What are our contacts with the state?’ and do an upfront analysis to quantify their tax exposure," he said.