The reality of tax reform and its effects on current year income and deductions will soon be evident as we move into the 2018 tax filing season. Though questions remain, there are steps which can be taken prior to year-end to take full advantage of the new provisions and avoid some of the pitfalls. We've compiled some of those steps for both individuals and business owners. You can download those below.
Background on South Dakota vs. Wayfair
Earlier this summer, the U.S. Supreme Court ruled in the landmark case South Dakota vs. Wayfair that the "physical presence test" for determining if a seller is required to administer sales taxes is “incorrect.” States may now legally require sellers to administer sales taxes, even if the seller has no in-state physical presence.
The case is a momentous development in the debate over the digital economy’s responsibility for the collection of sales tax. As companies increasingly conduct business across state lines, how states and the federal government craft tax legislation that addresses the evolving definition of “nexus” significantly impacts all taxpayers—including manufacturers.
While many states offer manufacturers generous sales tax exemptions on certain equipment and machinery purchases, the industry is now faced with new sales/use tax rules that impact both purchase and sale transactions. The Wayfair decision has important business implications manufacturers can’t afford to ignore—lest they wind up with a hefty tax bill they didn’t plan for.