Supreme Court Ruling - SD v. Wayfair - Options

2018-06-21 SCOTUS - SD v. Wayfair - Background
2018-06-21 SCOTUS - SD v. Wayfair - The Ruling
2018-06-21 SCOTUS - SD v. Wayfair - What Next?
2018-06-21 SCOTUS - SD v. Wayfair - Options
2018-06-21 SCOTUS - SD v. Wayfair - 2019

June 21, 2018 - The Supreme Court of the United States has announced its ruling in the case of South Dakota v. Wayfair. Deciding in favor of the State of South Dakota, you may now need to compute, collect and remit sales tax in every jurisdiction to which a sale is made. What is available to help you deal with this new reality?

Marketplace Fairness Act


The Marketplace Fairness Act has been under consideration in Congress for several years. It is intended to put an end to the stream of court cases brought by the states to enforce thier imposition of sales tax requirements for internet retailers by enacting federal law regarding the imposition of sales tax on interstate commerce. The law would likely have established minimum requirements for tax compliance on all interstate retail commerce. Now though, with the SCOTUS ruling Congress may no longer have much of a say in the matter. They will undoubtedly continue to debated the issue, but for now the SCOTUS ruling will be the law of the land.

State Only Remittances


There are currently 46 states that have a sales tax or gross receipts tax. Just Delaware, Montana, Oregon, and New Hampshire still exist as havens of free commerce in the U.S. For those states with a sales tax, they have been waiting since Quill v. North Dakota for this day. And they do not believe there to be any reasonable excuse for not collecting tax for their state. Moreover, most states already have tax compliance laws in place that they can now be able to enforce. And you can be sure they will. So continuing to ignore the collecting and remitting of state sales tax at least will no longer be realistic for any interstate marketer.

Streamlined Sales Tax System


The Streamlined Sales Tax System (SST) is a plan currently supported by 23 states that is intened to make sales tax reporting simpler for internet retailers. The system is similar to IFTA, the Interstate Fuel Tax Authority, which simplifies fuel tax remittances for trucking companies. With SST sellers can electronically submit a record of their gross sales by zip code to their home state. Their home state keeps taxes due them and forwards the out-of-state collections to the proper state. With each state doing the same, all states receive their share and assumes responsibility for distributing collected taxes to local jurisdictions in their state.

But how does the seller know how much tax to collect given the variety of state and local sales tax rates? The answer is with the zip code. Each participating state maintains a file of sales tax rates by zip code. The states submit their files for compilation by SST on a quarterly basis. The compilation file is then made available for download to subscribers for incorperation into their sales tax systems. Thus retailers can have up-to-date rates for every jurisdiction to which they make a sale.

SST presents a good model and has great potential to ease the burden of tax processing for anyone afffected by the new reality. But questions still are there. For example, what about states that do not partiipate in SST? How does one know if a particular transaction is taxable or not? If I am audited, what documentation will I need to assure all tax obligations have been met?

And there is one more issue with SST that needs to be considered. That is that the system is based on 9 digit zip codes. Five digit zip codes are not always an accurate means to identify a specific location, such as when a zip code is shared by more than one community, or when a city spans two or more counties, or when a tax is levied only for a portion of a city. If your systems have been built around and fully use 9 digit zip coding, great. But if not, SST may not work for you.

Vertx, Alvera. CCH, ...


These and other large software providers have a host of options for those looking for a complete solution to sales tax processing. They typically offer both in-house and cloud based services that not only compute the tax, but prepare remittances and even submit electronic payments for their subscribers. To be sure, these are the Cadillac of systems, and the costs associated with them will bear that out. So if you are on a limited budget, you will probably need to look elsewhere for a sales tax system.

IBM i and iPgmr.com


At iPgmr.com, we offer the only sales tax calculator native to the IBM i environment. The tax calculator has an API that you can invoke from any existing order entry or invoicing system you currently use. The API can be directed to save the results for remittance and/or auditing. Saved results can be scheduled for monthly, quarterly, or annual remittance individually by tax authority. Saved results for little used jurisdictions can be held until a filing is needed or held indefinitely for audit purposes.

The interface is simple. It requires only date, amount, and location. Location can be submitted as either city and state or zip code. Optional parameters include county qualifier, product/service code and decimal precision. Additional parameters are available for processing other consumer taxes such as lodging taxes, food service taxes, alcohol and tobacco excise taxes, etc. Calculator results are broken down by the individual tax authority so each tax can be itemized for remittance and auditing.

Best of all, the iPgmr.com Sales Tax System is available absolutely free and without obligation. You can download the system now at iPgmr.com or request a prduction system with all source code by sending us a completed no-cost license agreement.

Thank you!


The fact that you have found this blog post tells me you at least found a link to our website. Thank you for taking the time to read the blog. I hope the information has been instructive and useful for you. If you have something to add or correct, or if you have any unanswered questions about sales tax processing, please give me (Gary) a call at 320-200-2920. If you have any questions about iPgmr.com and our free iSeries software offerings, please visit our web-site, iPgmr.com.



Links to other articles...

Official Supreme Court Ruling (PDF)

www.TaxFoundation.org - Supreme Court Decides Wayfair Online Sales Tax Case

Wikipedia South Dakota v. Wayfair, Inc.

NPR Transcript David Green Interview with Nina Totenberg, NPR Legal Affairs Correspondent