Learn the main points of the court decision about tax on purchases from out-of-state sellers.

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 do not 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 could not 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.