POST-WAYFAIR - CAN YOU AFFORD TO WAIT TO REGISTER?

After the Wayfair decision, there is a lot of uncertainty out there. Every state with a sales tax that doesn’t already have an economic nexus statute on the books is scrambling to create one. You have states like Washington that held an emergency legislative session to create economic nexus effective October 1, 2018 for sales over $100,000 in a year. Mississippi created an economic nexus rule in 2017 with a $250,000 threshold, but announced that anyone registering by August 31, 2018 would be allowed to merely start collecting and remitting tax as of September 1, 2018. In other words, sales tax collection responsibility for remote sellers has hit a state of calamity that is changing day by day. But what can’t be avoided is that companies with remote sales over $100,000 into any one state need to face the reality that sales tax liabilities are beginning to accrue. States have publicly announced they won’t go retroactive, but that does not mean that the liability for sales tax simply doesn’t exist until you register. The exemption from retroactivity is only up to the date of the specific effective statute. That means if you don’t register and start collecting tax before the registration date – your company starts becoming liable for the tax.

This article will hopefully be a wakeup call for all companies are in a “wait and see” pattern. As soon as a particular state sets an “effective date” for its own economic nexus threshold, any dealer who meets those thresholds will become liable for the tax after that date regardless of whether they are registered and regardless of whether the tax was collected from the customer. I know it is hard to bite the bullet to start spending money on nexus studies, registrations, software to comply with multi-state sales tax, and all the other headaches that come along with multi-state compliance. But the reality is that if your company is selling across state lines in any significant volume, then you are starting to accrue a sales tax liability in some states already even with generous voluntary disclosure programs. The longer you wait to tackle this problem, the more sales tax liabilities that become liable for because you didn’t collect the tax from your customers.

Moral of the story – if you are sticking your head in the sand on Wayfair nexus exposure, then you are leaving your company exposed to quickly begin accruing thousands of dollars in sales tax liabilities every month. Now is time to take the plunge and start getting compliant while the effective dates of most economic nexus statutes are still a short distance in the future. If you want to minimize the cost of complying with Wayfair, then now is the time to start

About the Author: Mr. Sutton is a Florida licensed CPA and Attorney and a shareholder in the law firm the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Sutton is in charge of the Tampa office of the firm and his primary practice area is Florida sales and use tax controversy. Mr. Sutton worked in the State and Local Tax department of Arthur Andersen for a number of years and was an adjunct professor at Stetson University College of Law from 2002 – 2013 teaching State and Local Taxation as well as Boston University’s LLM in Tax Law. Mr. Sutton also serves as the Chairman of State and Local Tax for the American Academy of Attorney-CPA’s and speaks frequently throughout Florida on Florida tax matters. You can read more about Mr. Sutton in his firm BIO.

At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is state and local taxes, with a very heavy emphasis in sales and use tax. We have defended Florida businesses against the state departments of revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.

ADDITIONAL RESOURCES

FL SALES TAX FORGIVENESS POST-WAYFAIR: AMAZON FBA SELLERS, published June 28, 2018, by James Sutton, CPA, Esq.

SD v WAYFAIR - AMICUS CURIAE BRIEF FILED ON BEHALF OF THE AAA-CPA, by James Sutton, CPA, Esq.