Tax
Wayfair (South Dakota v. Wayfair)
The 2018 Supreme Court decision that established economic nexus for sales tax, eliminating the physical-presence requirement. Turned every remote seller into a potential multi-state sales-tax filer overnight.
Before Wayfair (2018), states could only require sales tax collection from sellers with physical presence. Wayfair allowed economic nexus: typically, $100K in sales or 200 transactions per year creates a sales tax obligation in that state.
Most states have adopted similar thresholds. Remote and online sellers now potentially have collection and filing obligations in 10–45+ states depending on their distribution.
The 45 states with a state-level sales tax each set their own threshold and their own effective date. Most cluster around $100k or 200 transactions annually, but several have moved to just $100k (dropping the transaction-count trigger) and a few remain outliers. Kansas, for a period, had no threshold at all — a single sale created nexus. Checking each state's current rule annually is table stakes for any e-commerce or SaaS business selling nationally.
The two-part exposure of missing Wayfair compliance is (a) the uncollected sales tax the business now owes personally to each state (because it didn't collect it from customers when it should have), and (b) penalties and interest on top. Voluntary disclosure agreements (VDAs) with state departments of revenue can often eliminate the penalty portion and cap the lookback to 3-4 years, but the underlying tax is still due. Waiting for a state to find you is the more expensive path.
Marketplace facilitator laws (Amazon, eBay, Etsy, Shopify's optional service) shift the collection burden to the marketplace for sales made through it — a real relief for sellers who only sell through those channels. Businesses that sell through BOTH direct and marketplace channels still owe compliance on the direct sales; the marketplace stripe is exempt. Splitting the two revenue streams cleanly in the books is the compliance foundation.
Common pitfalls
- Assuming physical-presence nexus alone still governs — post-Wayfair, economic activity is the primary trigger
- Missing new-state thresholds as revenue grows or geographic mix changes; some states tax SaaS or digital goods differently than tangible goods
- Ignoring marketplace-facilitator relief and double-remitting on Amazon or Etsy sales already collected by the platform
- Waiting for a state audit notice; VDA programs are cheaper if entered before the state finds you
- Treating a 3rd-party fulfillment center (FBA, 3PL) as if it creates no nexus; inventory stored in a state can create physical nexus separately from economic nexus
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