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The 1992 United States Supreme Court case of Quill Corp. vs. North Dakota set the precedent for online sales tax collection, ruling that unless a company held a physical presence within a state, no sales taxes could be exacted on merchandise sold into the state. The Quill Physical Presence Standard was overturned last June, when the Supreme Court found in favor of the state in the case of South Dakota vs. Wayfair Inc., fundamentally changing the collection of taxes by internet retailers.
The move from an undeniably under-adhered to use tax to a mandated sales tax collected at the time of sale has shifted the burden of reporting responsibility from the customer to the retailer. In effect, it’s creating a more competitive retail environment amongst online and brick and mortar retailers. The state-specific laws also have created a situation of increased manpower, time and expense for those retailers forced to comply.
Today, it is the responsibility of the online seller to keep track of which states have enacted new laws and the rate of tax to be assessed, based on the volume and number of transactions that a retailer executes within a state’s boundaries. And with each state’s taxation laws and rates differing, the fallout of the soon to be year-old online retail shake-up is being felt across those retail businesses, both large and small.…