It may be time to reevaluate your compliance with state sales tax laws following the U.S. Supreme Court’s recent ruling in South Dakota v. Wayfair.
While the case involved a dispute between the State of South Dakota and online retail giants like Wayfair and Overstock, it will have major implications even for nonprofits that use the internet to sell their products or resources.
Until the Wayfair case, a longstanding precedent from the Supreme Court prevented states from forcing sellers to collect and remit sales tax unless the seller had a certain actual physical presence in the state (like property or employees). But in Wayfair, a close 5-4 majority of the Court reversed the old physical presence requirement in light of new technology and the explosion in online retail that is costing states billions of dollars in lost tax revenue.
Over 40 states joined South Dakota in urging the Court to reconsider the physical presence rule. Now with this victory paving the way to impose sales tax obligations on online retailers, it will be critically important for all those impacted—churches and ministries included—to pay attention to further developments from the states and reach out to their tax professionals for guidance.