Hi there!

Are you a company—or the owner of a company—that sells services or products across state lines, or to individuals or businesses in other states? If so, you've probably encountered the perplexing issue of sales tax.

My name is Katherine Taylor. I'm an attorney for business owners, and I'm going to give you a quick briefing on why this situation is so complex—and why you should contact a professional if you have questions about whether your company owes sales tax in other states.

Generally, for a business that sells nationwide—or in more than one state—the question of whether to collect sales tax in a particular state isn't straightforward. That's because each state has its own rules, including different definitions of what qualifies as a service, a digital product, or a subscription service. The landscape is constantly shifting, making it difficult to keep up.

Things became even more complicated in 2018, when the U.S. Supreme Court decided the case of South Dakota v. Wayfair. Wayfair, an online marketplace for home goods and furniture, was doing business across the country. South Dakota wanted to tax the sales Wayfair made to its residents. Wayfair argued that it couldn't be taxed because it didn't have a physical presence—a brick-and-mortar location—in South Dakota.

The Supreme Court disagreed. It held that a physical presence is not required. As long as there is enough activity or commerce in a state to create a nexus, that state can impose sales tax. This ruling opened the door for other states to revise their sales tax regulations to increase tax revenue.

So, what does this mean for you?

If your company sells services or products into other states, it's important to take a close look at whether your specific offerings are taxable in those jurisdictions. It can be a complicated analysis, but it's one we help with all the time.

Feel free to contact us with any questions. And if you found this video helpful, please like it and subscribe to the channel so we can continue sharing valuable information with more business owners.

Thank you!