United States: Multistate Tax Obligation for US and Foreign Businesses
The US Supreme Court eliminated the “physical presence” safe harbor that had been protecting companies from sales tax for nearly 50 years. Unless Congress revokes this decision, the case may adversely impact both US and non-US businesses, as well as US consumers.
States may now impose sales tax on businesses without a physical presence in that state. Moreover, non-US companies may need to do some related tax planning, as international tax treaties do not address state and local tax issues. It is unclear whether “sales tax nexus” will equate to “income tax nexus,” but it is highly likely that states will become more aggressive when assessing businesses’ tax liabilities.
The full impact of the Supreme Court’s decision has yet to be seen. Businesses must be aware of the changes and possible related liabilities.