How Wayfair's Economic Nexus Has Redefined Business Tax Obligations

Corey L. Rosenthal, JD, and Rich Calve

The U.S. Supreme Court's landmark decision in South Dakota v. Wayfair, Inc. (138 S. Ct. 2080, 2018) overturned years of precedent that had precluded states from imposing sales taxes on sellers who derived sales from a state but had no physical presence there (e.g., payroll or property). Today, the impact of Wayfair has reached far beyond sales tax, including income tax, net worth/franchise tax, gross receipts tax, and overall business compliance. Although the initial focus was to level the playing field for brick-and-mortar and e-commerce businesses regarding the responsibility to collect sales tax, the Wayfair case has marked a shift to a new and much more elaborate tax environment that every multistate and e-commerce business, along with their tax advisors, needs to understand and address with even greater care.