Does your business have an Internet presence? Do you sell products to out-of-state buyers? Beware! The SCOTUS changed the rules on state sales tax limitations and you better pay attention. For decades the rule was states couldn’t tax sales unless the seller had a physical presence in the state where the customer was located. Earlier this year, court declared that states can indeed tax remote sales because, well, states need the money. What does that mean for your business? The flood gates holding back state sales tax laws have been blown wide open. The states are now free to enact laws to collect taxes from any one “carrying on business” in a state. Selling over the Internet constitutes carrying on business. Thus, sellers will likely have to comply with the sales tax schemes of 50 different states. And it’s even worse than that. In Minnesota, for example, state law allows counties to enact their own sales taxes. A business selling in MN must potentially cope with as many as 87 different county sales tax laws. While the flood gates are open, we don’t yet know what the flood will look like. One thing is for sure: you better get counsel before you’re blindsided.
