It’s been nearly three years, but the Wayfair decision is still impacting businesses in unexpected ways.
As a result of the decision in that case, almost every state with a general sales tax has implemented what many in the business refer to as ‘Wayfair laws.’ More specifically, economic nexus and marketplace facilitation legislation.
The speed at which these laws were implemented by states eager for additional sources of tax revenue meant that interactions between Wayfair legislation and other laws may not have been fully considered or understood at the time. Even now, as the last holdout states finally join the rest by implementing their own Wayfair laws, businesses are still feeling the effects in areas other than just online sales tax.
Direct-to-consumer (DTC) sales of alcohol have been growing over the last few years, but the pandemic pushed that growth into high gear. Marketplace facilitation legislation, which typically shifts the burden of collecting and remitting sales and use tax from the retailer to the online marketplace, obviously impacts online sales tax on these DTC alcohol sales. However, it’s also impacting (and complicating) the sales process in general.
As shared by Avalara, the laws that govern the responsibilities of unlicensed third-party providers (TPPs) and the licensed retailers often conflict with marketplace facilitation legislation. In essence, marketplace facilitation legislation places the burden of certain responsibilities with the TPP, but alcohol laws often require the responsibility to be taken on by the licensee.
California is the first state to offer specific guidance in regards to this conflict, but as DTC sales of alcohol continue, more states will likely need to do the same.
In addition to alcohol sales, the Wayfair decision has also inspired a slew of “Wayfair-style” laws in areas other than online sales tax, which complicate matters even further. Hawaii was the first state to do so. In 2019, the governor approved a bill with enacted an economic income tax standard for businesses without a physical presence in the state.
Several other states, including Oregon, Pennsylvania and Washington have followed suit and implemented laws styled after Wayfair-related legislation in areas outside of online sales tax.
As time passes and Wayfair legislation continues to be refined, we expect to see other interesting and unexpected interactions as a result. To keep on top of your business’s tax liabilities, it’s vital to stay on top of tax changes as they happen. Keep an eye on this blog to learn more!
If you have questions regarding your online sales tax liabilities, or any other state sales tax compliance questions, please contact us today. We’re happy to clarify any multi-state tax issues you’re trying to navigate.
