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If You Sell Online, You Need to Know About this Supreme Court Decision

If You Sell Online, You Need to Know About this Supreme Court Decision

For nearly 20 years, online retailers haven’t had to collect sales tax from all of their customers. That may be changing as a result of South Dakota vs. Wayfair, Inc. The Supreme Court ruled that Wayfair was responsible for collecting sales tax from South Dakota residents, even though Wayfair doesn’t have a physical presence in the state. This decision overrules a nearly 20-year-old decision, North Dakota vs. Quill, which had established the precedent that left many online vendors free from the need to collect and pay sales tax from all of their customers.

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What’s important to know about this decision: currently, this ruling applies only to South Dakota, which has a single sales tax rate and does not impose taxes retroactively on previous purchases. However, there are more than 12,000 taxing authorities within the United States, and they don’t all have the same rules. It’s likely that at least some taxing authorities will move to collect sales tax from online vendors, and this will impact your business.

Unfortunately, there’s no one size fits all approach to sales tax. Each taxing authorities has its own rules regarding what can be taxed, and at what rate. Some taxing authorities allow for retroactive taxation while others do not. It’s important to pay attention to this situation as it develops, so you can ensure that you’re in compliance with the law. There’s no doubt that addressing the sales tax issue will add a layer of difficulty to the online retailer’s life. However, there are some steps you can take now to make life easier for yourself later:

Stay Informed

Many retailers don’t realize that they pay one of the highest effective tax rates in the nation. The National Retail Federation has been the industry’s advocate for tax reform and strives to keep all retailers informed of the latest news. An easy way to stay informed is to follow the National Retail Federation on Twitter @NRFNews  The National Retail Federation also has a number of newsletters, some of which are members-only and some that are available to anyone. You can find out more information about them here: https://nrf.com/connect/newsletters

Ensure You Have the Right E-commerce Systems in Place

We know that South Dakota will require online vendors to collect sales tax (once certain sales thresholds are reached) and it is a reasonable assumption that other states and taxing authorities will do the same. It is a good idea to make sure your e-commerce platform is equipped with the relevant tax tables and tools to allow you to remain in compliance with the law. Shopify does, as does our own proprietary e-commerce platform, Stella. That way, when you’re required to begin collecting sales tax, you’ll be able to do so quickly and efficiently.

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Tom DiGrazia

With over a decade and a half of professional design experience, Tom brings his knowledge of design principles and focus on user experience to every aspect of his contribution to TTG. Paying special attention to each client’s brand, personalized needs and individual interests, he strives to create compelling concepts utilizing intuitive and highly-refined design solutions. In addition to traditional and digital design work and oversight at TTG, Tom also boasts a wide portfolio of web development projects with the company, allowing him to stretch his CSS and HTML skills across multiple platforms and disciplines. He feels that being a designer in the digital landscape of websites, eCommerce solutions, email marketing platforms and social media, it is important to understand the code that goes into these areas as it assists his ability to tailor designs specifically targeted to achieve the best end result and further builds understanding and communication with backend development teams.

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As Senior Marketing Strategist & Analyst at Technology Therapy Group, Courtney is energized by the ability to flex both her left and right brain daily. Courtney discovered her passion for Marketing at Bryant University, where she spearheaded research on students’ perceptions of Social Media Marketing for her Honors Capstone Project. After graduating Bryant in 2012, she joined the Technology Therapy team, where she’s honed her skills in social media, search and social advertising, email marketing, SEO, and more.

Since joining the team, Courtney has created digital marketing strategies and managed campaigns for clients across the country, ranging from plastic surgery centers, to jewelry stores, to construction companies. With a cohesive, cross-channel approach and a focus on data-driven decision making, she has increased their leads by up to 217%. But Courtney doesn’t leave her zeal for social media at the office; she also runs a local foodie Instagram account with her husband to document their meals across Rhode Island and beyond. Check them out: @hoppilyfed.

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