On June 21, 2018, The United States Supreme Court ruled in South Dakota v. Wayfair that states can require remote sellers with a substantial economic presence within a state, who don’t have a physical presence in the state, to collect and remit sales tax on transactions in the state.
The court pointed to several factors that allowed the South Dakota law to avoid putting an unreasonable burden on sellers:
- Only sellers who have a considerable amount of business are required to collect and remit sales tax. The threshold was $100,000 in annual in-state sales or more than 200 transactions in the state.
- The law was not retroactive, which means that sales and purchases preceding the effective date of the Wayfair decision couldn’t be taxed.
- South Dakota is one of 24 states that have adopted the Streamlined Sales and Use Tax Agreement, which makes sales-related tasks simpler and more cost-effective.
Since this decision, almost all states have enacted new legislation and started taxing remote sellers. This article has a comprehensive list of all the states that tax out-of-state sellers, the effective dates, and the thresholds they established.