You might not even be aware of the recent tax law that was passed by the Supreme Court in June in the South Dakota v Wayfair Inc. However, if you are an e-commerce business, your business might be significantly affected by the ruling. (https://www.nytimes.com/2018/06/21/us/politics/supreme-court-sales-taxes-internet-merchants.html)
For many years, sales from the e-commerce were in effect tax-free. The Supreme Court moved to close that loophole, ruling that states will be able to require retailers to collect state taxes on their transaction, whether they have a presence in the state or not. This law could affect any business that sell goods online. Determine whether your business could be affected by answering these few questions: Do you currently sell either online or through mail order? Do you sell in multiple taxing jurisdictions? If you answered yes to either of these questions then your business might be impacted by the recent ruling:
So what should your business be doing now?
Prepare for the ramifications of this new law by:
1) Know which states collect Internet sales tax and how much they collect
2) Prioritize states where the company has the greatest economic presence and create a plan to register to collect and remit sales tax (i.e., via a marketplace, or with a hosted, or cloud-based, technology solution).
Since the law hasn’t fully gone into effect we can only assume that the penalties for non-compliance will be similar to brick-and-mortar stores that don’t follow tax laws. We assume that non-compliant retailers will be required to pay out the collective sum of money that should have been collected from their customers via sales tax. Obviously, the more revenue a company collects, the higher this amount will end up being. Again, since states are allowed to choose whether or not to collect taxes through e-commerce business, we’ve yet to see how individual states will decide to penalize non-compliant companies. However, we’re sure that it won’t just be a slap on the wrist. Your best bet is to remain diligent in keeping up with changes to sales tax laws in the states your company operates within.
These new tax laws can be complicated and as a business owner you don’t have time to worry about these changes. However, our team is available to help set up your Magento website in order to accommodate new tax calculations and reporting requirements to make this ruling easy on your business! If you need to implement a solution, contact our team today!