The impact of the U.S. Supreme Court’s decision in South Dakota v. Wayfair, now over a year since it was handed down, continues to reverberate throughout the business world. As the year wears on, it’s clear the decision carries implications for industries beyond retail and, indeed, for the very basic functions of any business with multi-state operations, which clearly includes technology companies. Not understanding these implications can have significant financial consequences for technology companies—for example failure to collect sales taxes on remote sales can result in significant tax assessments for the seller beside other income tax related ramifications.
Management, with their tax advisor’s guidance, should be assessing potential sales and use tax exposures in light of Wayfair. Management should also consider how the Wayfairdecision affects some less-obvious areas of their organizations. Managing the fallout fromWayfair requires a holistic view of how your business’ areas of operation intersect with sales taxes, as well as other state taxes, such as income taxes. In other words, it requires leaders at technology companies to develop a comprehensive understanding of their total tax exposure.
The technology industry continues to pull at the thread of the Wayfair decision, unraveling its implications from income tax obligations and mergers and acquisitions (M&A) repercussions, to financial reporting changes and new marketplace facilitator tax laws. As with most matters concerning taxes, these issues seem straight-forward but can be very complex.
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