It took nearly four years, but the Senate finally held a hearing on the state sales tax landscape in the aftermath of the landmark Supreme Court decision in South Dakota v. Wayfair. That’s a positive sign that Congress is finally waking from its blissful slumber as an economic catastrophe brews under its nose for small businesses, but far more concrete action is needed.
Prior to Wayfair, businesses could only be required to collect and remit sales taxes on behalf of a state if they had some form of physical presence in that state — be it property, employees, or inventory. Wayfair changed that, allowing states to assess collection and remittance obligations on the basis of “economic nexus,” or a substantial economic presence in the state, even if the business in question had no physical presence. Since the decision, each state with a sales tax has instituted some form of economic nexus rules.
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