Sales Tax Trash Talk
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The worst 5 year anniversary

The worst 5 year anniversary

Rohit Bhadange
June 18, 2023

Hello fellow nerds. Sales tax isn’t sexy but we all deal with it. From the “I-am-running-this-out-of-my-kitchen” solo-preneurs to the Unilever size conglomerates. Unfortunately, it’s always the little guys & gals who get caught in the cross fire.

*cue* Sales Tax Trash Talk

I’ll dig through the trash every week, and give you the download on what you need to know. We’ll try to be funny but keep your bar low and you might laugh… remember this is sales tax, not SNL.

If you have any questions, just ask. We’ll answer them all, gratis, and feature one for the team each week. Don’t write me hate mail if you don’t get featured, this isn’t a Drake song, it’s a sales tax newsletter. Try again next time.

I know you’re here to cure your Sunday Scaries, so let’s see what’s in today’s trash:

5th anniversary of South Dakota v. Wayfair 😵‍💫
Economic nexus requirements changing in SD and LA 🚨
“Dried fruit is candy” says the government 🙄
Meme submission 😎
You ask, we answer 🙋‍♀️

5 years since “The Decision” ⚖️

Wednesday (June 21) marks the 5th anniversary of the infamous South Dakota v. Wayfair US Supreme Court ruling that’s made life a lot more difficult for all businesses. Unsurprising move by the gov’t…

Background: In 2018, the US Supreme Court overturned a 1992 law in a tightly contested (5-4) decision, and enabled states to tax purchases from out-of-state sellers who did not have a physical presence in the state.

Response: States were overjoyed to cash in more money than ever; many swiftly implemented economic nexus laws (yes, the gov’t can move fast when they want to). Businesses were left confused and to fend for themselves.

5 year impact…

SMBs are being hit the hardest… compliance complexity has created barriers to growth despite the rise in the e-commerce & multi-channel enablement tools.
Customers are paying… businesses have raised product prices to cover compliance cost (i.e., technology and/or new hires).
Challenges for international sellers… more tax and banking regulations to add to existing customs duties and import tax rules.

All the while, the gov’t has over doubled its sales tax revenue in last 20 years, yet still believe they are being robbed of over $350 billion. It’s never enough.

🚨Transaction Thresholds are Disappearing🚨

Starting July 1, South Dakota will eliminate the 200 transaction count from its economic nexus threshold, allowing businesses to establish remote seller nexus based solely on sales activity.

This change will (A) simplify compliance efforts; (B) promote fairness to smaller sellers (most hit the transaction threshold far before the $ threshold); and (C) provide clarity for taxpayers.

Louisiana will follow suit starting August 1st, becoming the 10th state to drop the transaction count from its economic nexus threshold.

State specific guides & rules →

Agree or Disagree: Dried Fruit = Candy? 🍬

In certain states, dried fruit, like craisins, are categorized as candy… if they're sweetened before drying (most are).

Two years ago, Wisconsin recognized their nutritional value, took a stand and cut them some tax slack. Most states followed suit but it seems like four states are holding a grudge, and they ain’t budging. Craisin haters uniting. Ok then.

Find product taxability rules relevant to your business →

😎 Meme of the Week 😎

🌟 Partner Spotlight 🌟

UpCounting is an accounting, marketing and business consulting firm that empowers brands to succeed at DTC. They leverage powerful cloud technology and expert analytics to deliver experiences customers love. Their team can help you build the company of your dreams.

Interested? Just reply to this email and I can make an intro.

🙋‍♀️ You ask, we answer 🙋‍♂️

Q (Ashley): How do you decide between Economic Nexus and Physical Nexus?

A: If you meet one of the two, you have nexus in the state. You do not have to meet both to have nexus. Just one.

If you have a physical presence in a state (e.g., store, employee, inventory), you have physical nexus. Typically, if you exceed $100,000 in sales or 200 individual orders over a year in a state, you may have met the state’s economic nexus threshold.