Strategizing Multinational Tax Risks

The Supreme Court has held in the Mayfair case decided June 21, 2018, that physical presence is no longer required for a state to collect sales and use tax from an out-of-state seller.  Both out-of-state and foreign sellers will be affected by this ruling that overrules decades of sales and tax foundations upon which constitutional law was based.

Under National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U. S. 753, and Quill Corp. v. North Dakota, 504 U. S. 298, South Dakota may not require a business that has no physical presence in the State to collect its sales tax.

The referenced Supreme Court decision and EY’s Global Tax Alert highlight this major development.

Multinationals will need to review all sales into every state to determine their domestic law, irrespective of prior Constitutional limitations for physical nexus.