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Understanding Sales and Use Tax Compliance

If your business makes sales to consumers in other states, you may already be aware of the U.S. Supreme Court decision from 2018, South Dakota v. Wayfair, Inc., that reversed the court’s earlier decision on business transactions conducted from another state.

The Law Office of Williams & Associates, P.C., can advise clients on the Supreme Court’s decision and how it may impact their business regarding the collection of sales and use tax, and available compliance options that may reduce tax and penalties.

A Brief Guide to the U.S. Supreme Court Ruling

The Wayfair case arrived after South Dakota passed a law in 2016 requiring out-of-state retailers to remit sales taxes “as if they had a physical presence in the state” if they sold at least $100,000 in gross sales to customers in the state or engaged in at least 200 transactions regarding the sale of goods delivered into the state each year.

Previously, a 1992 ruling, Quill Corp. v. North Dakota, said a business had to have a physical presence in the state for sales tax and use tax obligations to apply, in order to satisfy the Commerce Clause (leaving it to the U.S. Congress to regulate interstate commerce).

In Wayfair, the majority opinion stated that the Quill ruling had not adequately resolved the Commerce Clause issues, nor had the physical presence rule properly addressed which companies have a nexus within a given state and may be subject to taxes.

Following this legal ruling, many states have updated their laws on sales and use tax, and other related issues, and more are expected to follow. Our attorneys can review your sales tax vulnerabilities in light of the new decision and provide guidance on the best ways to proceed.

If you think you owe California tax, contact us before you are audited. We can help you with one or more of California’s voluntary disclosure programs to significantly reduce your tax liabilities and penalties.

Trust Our Firm for Advice on Tax Changes

Our firm is known nationally as well as within California for its excellence in practicing tax law. Our attorneys have been selected for inclusion in the Super Lawyers annual list and rated “Superb” by Avvo. The firm received a Metropolitan Tier 1 Tax Litigation “Best Law Firm” designation by U.S. News & World Report for every year since 2013.

Call our Sacramento office at (916) 488-8501 or toll-free at (800) 684-7147, or email the firm to discuss your sales and use tax or other tax concerns.