On June 21st, the Supreme Court of the United States issued its decision in the South Dakota v. Wayfair case. This decision will generally have a tremendous detrimental impact on dealers and their dealerships. This Wayfair case is likely the most significant state tax decision issued in over 50 years and changes the rule for collecting and remitting sales tax to a state from that of requiring a dealer to have a physical presence in that state to one of simply doing business with customers from that state (so-called “economic nexus”).
We recommend that you listen to the recent HBK Dealership Industry Group’s Third Thursday Webinar which provides a more complete picture of the dramatic impact of this ruling on dealers and their dealerships. The webinar can be accessed by going to www.hbkcpa.com/resources/hbk-webinars and viewing the July 19, 2018 webinar.
Prior to the Wayfair decision several states had adopted economic nexus statutes; but, it was unclear whether these statutes would be effective. As a result of the Supreme Court decision state’s are feeling emboldened to adopt or enhance their economic nexus statutes. Some states require as little as $10,000 in sales in a 12-month period in order to mandate the dealer to collect and remit sales tax to that state. Thus far, 27 states have enacted economic nexus rules with varying economic activity thresholds. These states and the thresholds are listed below.
| State | Threshold |
| AL | $250,000 |
| CT | $250,000 |
| GA | $250,000 |
| IA | $100,000 |
| IL | $100,000 |
| IN | $100,000 |
| KY | $100,000 |
| LA | $100,000 |
| MA | $500,000 |
| MD | As broadly as permitted under the U.S. Constitution |
| ME | $100,000 |
| MN | $100,000 |
| MS | $250,000 |
| ND | $100,000 |
| NJ | $100,000 |
| OH | $500,000 |
| OK | $10,000 |
| PA | $10,000 |
| RI | $100,000 |
| SC | As broadly as permitted under the U.S. Constitution |
| SD | $100,000 |
| TN | $500,000 |
| UT | $100,000 |
| VT | $100,000 |
| WA | $10,000 |
| WI | $100,000 |
| WY | $100,000 |
Rex Collins is a Principal at HBK CPAs & Consultants. He directs HBK’s National Dealership Industry Group, which provides tax, accounting, transactional and operational consulting exclusively to dealers. Rex can be reached by email at rcollins@hbkcpa.com; or by phone at 317-504-7900.
Shane Finn directs HBK CPAs & Consultants State and Local Tax Practice (“SALT”) with special emphasis on the impact of SALT on dealerships. Shane can be reached by email at sfinn@hbkcpa.com; or by phone at 215-628-8080.