By Jason Skrinak, CPA

Ever have primarily focused on how states will react to the ruling and the new standards for creating nexus. While it will be interesting to see how states react to the Wayfair standards ($100,000 of annual sales and/or 200 within a state), I wonder how businesses will react to the decision. I have already heard a variety of opinions, ranging from “We will begin registering and filing sales and use tax returns in every state” to those who want to keep their heads in the sand and do nothing. Based on my state tax consulting experience, the best approach for most businesses is somewhere between these two extremes.

Where Are We Coming From?

Although Wayfair provides a preliminary map as to how states may treat economic nexus for sales and use tax purposes, we must remember what the nexus standards were prior to this court decision. I have been helping my clients review prior business activities in various states and determine whether they were properly registering, filing, and remitting sales and use tax to those states in which nexus previously existed. If this review finds that they had not properly complied with all states, I recommend that they consider voluntary disclosure programs.

Where Are We Now?

Now that Wayfair has provided a standard for states to follow to impose economic nexus, I suggest comparing current states with an economic nexus statute to the standard outlined in the decision. When reviewing states with existing economic nexus provisions, take note of the effective date of those provisions. In states with provisions similar to the Wayfair standard, it is important to calculate possible exposure going back to the effective date, and consider the potential benefit of a voluntary disclosure agreement.

Where Are We Going?

The Wayfair standard should be applied as a litmus test for businesses involved in multistate sales. I expect to see more states enact economic nexus standards going forward that closely mimic the standard in the Wayfair decision. I’ll be closely monitoring state actions to address Wayfair and the effective dates of such actions. I hope states adopting new economic nexus standards will allow businesses sufficient time to plan and prepare for new registration, filing, and remittance requirements. Regardless of the effective dates set forth by the states, taxpayers should proactively develop a plan for compliance with their predicted exposure under expected Wayfair changes

C. Skrinak, CPA, is the state and local tax practice leader in the tax services group at RKL LLP. He is a member and former chair of the PICPA State Taxation Committee and frequent PICPA lecturer on state and local tax issues. He is also a member of the PICPA Fiscal Responsibility Task Force.

Learn more in The Wayfair Decision and Its Impact on Pennsylvania Businesses.