The Wayfair decision, given by the U.S. Supreme Court in 2018, significantly changed how sales tax is handled for ecommerce businesses. The ruling allowed states to collect sales tax from out-of-state sellers who meet certain economic thresholds, even if the business doesn’t have a physical presence in the state. This landmark decision affects any ecommerce business selling across state lines.
In practice, the Wayfair ruling has led to a complex landscape where ecommerce sellers must comply with varying sales tax rules in each state. Each state now sets its own thresholds for sales volume or transaction count that determines whether a seller must collect sales tax. As a result, ecommerce businesses must carefully track their sales and ensure they collect the correct amount of sales tax in the states where they have nexus. The Wayfair decision emphasizes the importance of compliance and leveraging automated systems for tax collection.
For more information on sales tax, check out our ecommerce sales tax guide.