When the U.S. Supreme Court in 2018 handed down its internet tax decision in South Dakota v. Wayfair, which held that a company does not need to have a physical presence in a state to be required to collect sales tax on sales to customers, a thunderstorm erupted within the e-commerce industry. There was, however, a silver lining to the Wayfair case. Unfortunately, many Florida businesses might find the silver lining just as challenging as the storm itself.
Prior to the Wayfair decision, a company could avoid collecting tax on sales to customers in another state by avoiding any type of physical presence there—no office, no employees or independent contractors, no trade shows, no “click-through” arrangements to pay commissions to a referral source in the state, and no inventory in the state. In such a case, Supreme Court precedent held that the state could not compel the company to collect its tax. However, Wayfair reversed the prior precedent, holding that a state may require a company to collect its tax so long as the company had a material level of sales there.
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