By: Frank Brodnax
Yesterday the Supreme Court effectively killed the physical presence standard as it relates to sales tax. The Court has finally acknowledged that the old law under Quill (a 1992 case) has not kept up with the technology advancements of modern e-commerce. For example, as stated in this case, “a business that maintains a few items of inventory in a small warehouse in a State is required to collect and remit a tax on all of its sales in the State, while a seller with a pervasive Internet presence cannot be subject to the same tax for the sales of the same items.” Clients need to reassess their sales tax collection policies. Also, as for income tax purposes, with the death of the physical presence standard, the economic presence standard just got a friend in the Supreme Court and clients will see states asserting nexus like never before.
For more information about the specifics of the Court’s ruling, please consider the following article: Supreme Court Widens Reach of Sales Tax for Online Retailers.
FRANK BRODNAX, CPA, MST, is a director in Ellin & Tucker’s tax department and a leader within the firm’s Real Estate Services Group. Over the course of Brodnax’s 25-year career, Frank has been instrumental in developing the firm’s real estate practice and has advised on tax planning and compliance issues for real estate business owners and property management firms. He can be reached at email@example.com.