SCOTUS Ruling Brings Big Changes for Out-of-State Online Retailers

If your company is doing online/catalogue business in states where you do not have a physical presence, you may now be required to collect state and local sales taxes in that jurisdiction. This new rule may apply retroactively to internet sales made after June 21, 2018, or even earlier depending on the state. It is our understanding that this rule does not impact currently exempted items, including seeds purchased for farming operations.

The change in policy is the result of the June Supreme Court (SCOTUS) ruling in South Dakota v. Wayfair. In siding with the state of South Dakota, SCOTUS ruled that states can collect sales tax on online purchases regardless of whether the retailer has a physical presence in the state. Previously, state taxation of interstate commerce had been restricted to sales made by retailers physically present in a state per the 1992 Quill Corp. v. North Dakota decision.

ASTA has signed onto a group letter to Congress in support of a legislative correction that would provide a phase-in of the implementation of the new standards until April 1, 2019. The association is also continuing to coordinate with other groups more closely engaged in the tax/e-commerce space to look into any potential actions to mitigate the compliance burden on companies engaged in non-exempt seed sales. If you have questions, or think you may be impacted by the ruling and want to be kept appraised of future activities, please contact Virginia Houston to be added to our outreach list.