Insights: Article

Sales Tax Compliance for International Businesses

By Aaron Boyer, Shannon Lemmon

July 31, 2018

The United States Supreme Court recently made a decision that will impact out-of-state sellers, including foreign inbound sellers.

The Supreme Court in South Dakota v. Wayfair Inc. overturned the Quill decision that implemented a physical presence requirement for the collection of sales tax on remote sellers. In 2016, South Dakota passed legislation that created an economic nexus standard for sales tax and did not require a physical presence. Over the course of the last two years, this legislation was challenged and ultimately heard by the US Supreme Court, which ruled in favor of South Dakota on June 21, 2018.

Under the South Dakota economic nexus standard, sales tax nexus is created if an out of state seller:

  1. Makes sales into South Dakota of at least $100,000 in the prior or current year, or
  2. If the taxpayer engaged in 200 or more separate transactions in the state.

The US Supreme Court upheld these economic nexus standards, and the decision has prompted more states to now consider, introduce, and in some cases pass economic nexus standards similar to South Dakota’s rules. Therefore, foreign sellers now need to consider the sales tax impact of selling into the U.S. regardless of whether they have a physical presence or Permanent Establishment.

Due to the recent Wayfair decision, we recommend foreign companies selling into the U.S. review their sales tax compliance requirements in all states in which they do business.

For more information or if you have questions regarding your situation, contact your Eide Bailly professional or a member of our international tax team today.

Latest Insights

November 26, 2018
Article
If you have activity in one of these new campaign areas, you may have a higher likelihood of being contacted by the IRS to have your tax returns examined.
September 12, 2018
Article
The Tax Cuts and Jobs Act, signed December 22, 2017, significantly impacted inbound tax planning. Non-U.S. taxpayers doing business in the U.S. will need to consider the new tax laws.
August 28, 2018
Article
Recently, more companies in the manufacturing industry are becoming involved in foreign transactions, including exporting. However, many are not aware that they can improve their cash flow and reduce their U.S. tax liability through the use of the…
August 28, 2018
Article
If you’re a company with foreign sales, one suggestion for tax relief is setting up an IC-DISC. What is an IC-DISC? The Interest-Charge Domestic International Sales Corporation, more commonly known as the IC-DISC, is an export incentive…
August 1, 2018
Article
The IRS recently issued the Transfer Pricing Examination Process, which provides a guide to best practices and processes to assist with the planning, execution, and resolution of transfer pricing examinations.
May 25, 2018
Article
Did your U.S. business have direct or indirect ownership or control by a foreign person or enterprise at any time during 2017? If yes, you need to read on.
April 20, 2018
Article
We commonly get asked “I don’t even live in the US, why would this matter to me?” With the increase of global economic expansion we are starting to see more and more United States individuals moving to other countries throughout the world.
March 26, 2018
Article
The IRS has announced it will end the Offshore Voluntary Disclosure Program (OVDP) on Sept. 28, 2018.The IRS is now announcing the end of this program to give taxpayers the next few months as a last chance to come forward with any undisclosed…
February 28, 2018
Podcast
Learn more about the biggest tax reform changes impacting international businesses in our recent podcast with Globig.
Find A Location