The recent June Supreme Court’s Wayfair ruling on states’ collection of Sales Taxes overturns the previous physical presence requirement, but it does not provide states carte blanche to enact or enforce all forms of economic nexus (formerly physical presence) laws. Many states’ new laws also have features that prevent them from violating what is known as Commerce Clause protections. Those provisions include:
- The law has a safe harbor provision for transacting limited business in the state that does not meet the specific thresholds;
- The law is not retroactive
- Some states are members of the Streamlined Sales and Use Tax Agreement, which reduces administrative and compliance costs for taxpayers and even provides state-funded sales tax administration software.
The important point is that if your company is transacting business in other states as non-taxable that would be taxable if you had a location in that state, you should review those state’s new tax rules to see if you will be violating the new rules by not charging sales taxes for sales in those states. If you find that you now have to collect sales taxes in some states, you may use Sage ERP’s built-in Sales Tax system to setup tax codes and rates to do that, but you will have to continually monitor those states’ sales tax rules and rate changes and change the sales tax settings in your Sage system for each state/jurisdiction involved. For companies who have significant taxable sales into many states – Friendly Systems recommends considering Sales Tax Rate compliance software systems including Avalara to manage your Sales Tax calculations and reporting requirements for Sage ERP system sales. Let us know if you would like more information on how to change Sage ERP sales tax settings or about the Avalara Sales Tax reporting system for Sage 100 and Sage 300 systems.