An executive summary on what every business owner needs to know about the landmark Wayfair decision.

1. WHAT YOU NEED
TO KNOW ABOUT THE
SUPREME COURT’S
WAYFAIR DECISION

2. IN 30 MINUTES, WE WILL
PROVIDE PARTICIPANTS WITH A
SUMMARY OF:
SOUTH DAKOTA V.
WAYFAIR DECISION
IMMEDIATE AND LONG-TERM
EFFECT OF WAYFAIR DECISION
OBJECTIVES
NEXT STEPS
NEXUS

3. NEXUS
The minimum connection between a state and business
which lawfully allows a state to mandate such business
collect and remit sales tax on taxable purchases made by
in-state residents.
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4. “MINIMUM CONNECTION”
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Old Standard – Physical presence
• National Bellas Hess (1967)
• Quill (1992)

5. TODAY’S ECONOMY
A few things have happened since National Bellas Hess (51 years
ago) and Quill (26 years ago):
• In 1992 less than 2 percent of American had Internet access.
Today that number is about 90%.
• In 2015 Amazon overtook Wal-Mart as the world’s largest
retailer.
• It’s estimated that the current physical presence requirement
cost states over $20 billion annually in uncollected sales tax.
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6. CURRENT SOUTH DAKOTA SALES TAX LAW (2016)
An out-of-state seller is required to collect sales tax on taxable products and
services to in-state residents if the seller meets the following threshold:
• The seller grossed more than $100,000 in sales of tangible personal property,
any product delivered electronically or services in South Dakota in the previous
calendar year or current calendar year, OR
• The seller sold tangible personal property, any product delivered electronically
or services in South Dakota in 200 or more separate transactions.
Notes:
• Approximately 20 other states have similar laws on their books.
• Above tests apply to all sellers (regardless of whether on internet or not).
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7. SOUTH DAKOTA V. WAYFAIR, INC.
South Dakota asked U.S. Supreme Court to overturn National
Bellas Hess and Quill physical presence requirement by
validating the State’s law that requires out-of-state sellers (with
no in-state physical presence) to collect and remit sales tax if
such sellers meet certain business activity thresholds.
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8. AND THE WINNER IS…
• South Dakota
• Overturned National Bellas Hess and Quill physical presence
requirement
• South Dakota’s law is new sales tax nexus standard
• Remanded case back to South Dakota Court to determine if
law satisfies the Commerce Clause (SCOTUS indicated it
does)
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9. SUMMARY OF DECISION
The factors the Court considered in deeming South Dakota’s sales tax law
(which does NOT require physical presence) constitutional:
• The law applies a safe harbor to those who transact only limited
business in South Dakota (i.e., the threshold tests).
• The law ensures that “no obligation to remit the sales tax may be applied
retroactively”.
• South Dakota is “one of more than 20 states that have adopted the
Streamlined Sales Tax Agreement” (“SSTA”).
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10. SHORT-TERM ACTION PLAN
What we know:
• There is a new sales tax nexus standard.
• South Dakota’s law is constitutional.
• Over 20 states have South Dakota like sales tax statutes.
• One state (North Dakota) is on record as stating they will begin
enforcing Wayfair decision immediately.
What’s up with the Dakotas?
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11. SHORT-TERM ACTION PLAN
Three Options
1. PANIC and register in every state that imposes a sales tax.
2. DO NOTHING and wait til states catch you.
3. Conduct a “WAYFAIR ANALYSIS”
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12. THE WAYFAIR ANALYSIS – Phase I
1. Determine if Company has any historical sales tax exposure based
on physical presence standard.
2. Determine potential prospective sales tax collection responsibilities
based on South Dakota business activity threshold tests.
3. Prioritize sales tax registrations based on a number of weighted
factors including (not all-inclusive):
• Company’s historical sales tax exposure.
• Where Company does business and whether such states have enacted
a South Dakota like sales tax statute.
• Is state a member of SSTA?
• Are the Company’s products/services subject to sales tax in the state.
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13. THE WAYFAIR ANALYSIS – Phase II
1. Determine Company’s current sales tax compliance capabilities.
2. Determine ability of Company’s current accounting system to
integrate sales taxability matrix.
3. Determine cost efficient process to:
• Register Company with DOR.
• Compliance
Based on results of Steps 1 and 2, a Company can make an informed
decision on how best to address the effect of Wayfair on its business.
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14. CLOSING COMMENTS
• Make informed decisions on how Wayfair ruling effects
your business. All companies that sell products/services
(whether or not via internet) should do The Wayfair Analysis.
• The Wayfair decision has created as many questions as
answer:
• Are South Dakota’s business activity thresholds a floor?
• What happens if a state is not a member of SSTA?
• Can a state make sales tax law retroactive?
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15. CLOSING COMMENTS
• Likely most, if not all states will adopt sales tax nexus
standards similar to South Dakota’s.
• Compliance with the new economic nexus standards will be
costly whether a company complies (i.e., compliance costs) or
not (exposure).
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16. CONTACT US
DAVID SEIDEN, CPA
SALT Practice Leader
Partner
(914) 517-4447
dseiden@citrincooperman.com
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EUGENE RUVERE, CPA
Partner
(914) 949-2990
eruvere@citrincooperman.com
THOMAS WALSH, CMI
Principal
(212) 225-9559
twalsh@citrincooperman.com

17. THANK YOU