Understanding Economic Nexus: A Guide for Trailer Dealers

Economic nexus legislation determines when a business must collect and remit sales tax in a state, based on its economic activity rather than a physical presence. For dealers who sell products across state lines, understanding these laws is crucial to staying compliant.

Why Economic Nexus Matters to You

If you sell a trailer rack to a customer in a state where you don't have a physical location, you may still be responsible for collecting and remitting that state's sales tax. This is a significant shift from the old rules that relied solely on having a physical presence, like an office or warehouse.

The key change came from the 2018 Supreme Court ruling in South Dakota v. Wayfair. This decision allows states to require out-of-state sellers to handle sales tax if they meet a certain threshold of economic activity (such as a specific number of transactions or total revenue from that state). Since this ruling, many other states have implemented similar laws.

Stay Compliant and Protect Your Business

While navigating these regulations can seem complex, compliance is essential for protecting your business. The goal of this legislation is to create a fairer, more level playing field for all businesses, both online and brick-and-mortar.

Staying informed and compliant is your best strategy. Because tax laws vary by state and are subject to change, it is highly recommended to consult with a tax professional to ensure you are meeting all your obligations.

Reference

South Dakota v. Wayfair, Inc., 585 U.S. ___ (2018)