Local governments may also see a windfall as a result of the ruling, as the government estimates that between $9 billion and $13 billion in potential tax revenue is left on the table, thanks to earlier supreme court decisions on the taxation of online purchases.
If the physical location of your business (your tax nexus) and your customers are in the same state, you must collect sales tax on any purchases made by those customers sales taxes may be set based on either the location of the seller or of the buyer these are called origin-based or destination-based sales taxes.
Despite what you sometimes hear, however, some internet sales are subject to sales tax, and even when a site doesn't collect sales tax, consumers are technically responsible for remitting any unpaid sales tax on online purchases directly to their state. Online sellers who are based in states with destination-based sales tax sourcing are required to charge the sales tax rate at the buyer’s “ship to” address as a seller, you are required to calculate and charge the state, county, city and other local sales tax rates where your buyer is located.
For you as an internet retailer, the decision may mean you’ll need sales tax software to keep you up to date on which states and localities collect sales tax and at what rate the links below take you to an article on the internet sales tax rules in each state prior to the wayfair decision some states already had laws, commonly referred to as amazon laws, that required larger internet sellers without a physical presence in the state to collect and pay sales tax under certain circumstances.
For consumers that order tax-free items online, but live in states that charge a sales tax, they are technically required to report that purchase to their state tax agency and pay the sales tax directly to the agency when consumers are required to do so, it is often called a use tax. Whether you must charge your customers out-of-state sales taxes comes down to whether you're operating in an origin-based state or a destination-based tax state the process of determining which tax rates must be applied to individual purchases is called sales tax sourcing, and yes, it can be.
South dakota is leading the legal charge, passing a law requiring the collection of sales tax on internet vendors with at least 200 yearly transactions or $100,000 in sales to its residents. Wayfair inc, was a victory for brick-and-mortar businesses that have long complained they are put at a disadvantage by having to charge sales taxes while many online competitors do not and it.