In 2018, in the Wayfair case, the U.S. Supreme Court overturned an earlier precedent that had said sales tax could be legally imposed on internet sales only when an online merchant had a physical presence in the state. What is clear now is that states can impose sales tax on internet sales even when an online merchant has no physical presence in a state. What is also clear is that, for a sales tax statute to be valid, the online merchant still has to have a requisite nexus to the state to satisfy due process requirements. In the Wayfair case, the Court refers to the particulars of the South Dakota sales tax statute that were important in swaying the Court that the statute was constitutional. When advising an e-commerce client on the subject, it is a good idea to focus on that analysis.

Instructions:

In a business letter to your client explain when a state may legally require his business to collect sales tax on internet sales of merchandise. Cite the standards that have been created by the Wayfair decision to give your client guidance. Remember you are writing to your client, so don't be too technical, or too wordy, but provide accurate and up to date advice. You can include references to any sales tax state statute you believe is applicable as an example but focus on the standards the U.S. Supreme Court has established as to when a state can legally impose sales tax on internet sales. Your client really wants to know whether a given state sales tax statute is likely to be valid or can be challenged in court.