South Dakota v. Wayfair – Economic nexus and manufacturers’ sales tax obligations

Description

Abstract: It’s been more than three years since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair. In that case, the Court held that a state may require out-of-state sellers to collect and remit sales tax even if they lack a physical presence in the state. Since then, nearly every state with a sales tax has enacted an “economic nexus” law that extends the reach of its sales tax collection obligations to sellers beyond its borders. This short article reveals that although sales by manufacturers are often exempt from sales taxes, they can’t afford to ignore economic nexus laws in states where they do business.