What Does Wayfair Mean for Retailers that Sell into Minnesota?

On June 21, 2018, the Supreme Court released an opinion that would change the online marketplace forever. In South Dakota v. WayfairSouth Dakota v Wayfair , SCOTUS overruled the longstanding physical presence requirement outlined in Quill Corp. v. North Dakota. For more of a background on these cases see our recent blog, Wayfair Puts Quill’s Physical Presence Test for Sales and Use Tax Collection to Bed. The same day the Supreme Court of the United States (“SCOTUS”) released its opinion on Wayfair, the Minnesota Department of Revenue (“DOR”) also provided guidance on the issue. Specifically, the Minnesota DOR released minimal guidance on what Wayfair means for retailers making online sales into the state. The Minnesota DOR instructed as follows:

- Sellers already collecting and remitting, either directly or through a third-party, should continue to do so;
- Sellers not already collecting and remitting will be provided guidance within 30 days; and
- Sellers that want to start collecting and remitting can register for all 24 Streamlined member states by applying through the Sales Tax Registration System.

The Department also stated it is currently analyzing how SCOTUS’s ruling affects online and out-of-state retailers and will provide additional guidance on the issue within 30 days. SCOTUS overruled the physical presence requirement in Quill Corp, but failed to give us a standard for what exactly creates nexus going forward. As a result, this will be a trial and error process for each state. Some have taken the position that the standard for nexus is now the South Dakota law, however, it is unclear if this is what SCOTUS intended.

We will be on the lookout for further guidance from the Minnesota DOR and will update you accordingly. It is likely Minnesota is working on passing a law similar to South Dakota’s. To date, the following states have already enacted legislation that is similar to South Dakota’s:

Alabama, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Mississippi, North Dakota, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Washington, Wyoming

It will be interesting to follow how both the states and businesses respond to this case. If your business has an online presence, then this ruling affects you. For additional information on the tax implications of how this ruling affects your business specifically contact us.

Gerald “Jerry” Donnini II is a shareholder of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of state and Federal tax matters, with a heavy emphasis on the tobacco, alcohol, motor fuel and related industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com.  For more information please call us at 888-966-8216.