US House of Representatives considers Wayfair’s impact on small businesses

A hearing held on 3^rd March 2020 considered the U.S. Supreme Court’s decision of South Dakota v. Wayfair, Inc. and how it has impacted small businesses over the past two years.

The hearing was held by the U.S. House of Representatives’ Committee on Small Business, Subcommittee on Economic Growth, Tax, and Capital Access. Several elements of the Wayfair decision were discussed, including the effect it had across the nation and the impact on small businesses.

Initially, the 2018 ruling that saw an overturning of the physical presence nexus rule for sales and use tax collection, was met with active engagement in all States. Sales tax collection requirements for marketplace facilitators and remote sellers began soon after, causing a significant compliance burden for small businesses.

The hearing revealed witness testimonies and suggested legislative solutions by the American Institute of Certified Public Accountants (AICPA) for the purpose of Congress to consider state tax simplification.

According to AICPA, small businesses are lacking in the resources, revenue and time needed to accurately comply with the inconsistent and varying compliance obligations across the nation.

Congress will therefore consider possible federal legislation with the aim of simplifying sales tax collection obligations for remote sellers. The principles of equity, fairness and effective tax administration highlighted at the hearing will be taken into account.

Source: Grant Thornton