Wayfair decision likely to impact small businesses most

By Gary Hunt, OSCPA senior content editor

The U.S. Supreme Court’s June 21 “Wayfair” decision is likely to have a disproportionate effect on smaller, “mom and pop” type businesses, one expert says.

The court ruled that states can assert nexus for sales and use tax purposes without requiring a seller’s physical presence in the state.

“Very rarely will you ever see just a pure brick and mortar store anymore,” said Rich Fry, J.D., MT. a tax attorney with Buckingham, Doolittle & Burroughs in Akron. “All the small vendors – or at least the vast majority of them – have an online presence and try to make sales online. Now they’re going to have the additional compliance cost to deal with collecting sales tax outside of their home state.”

In contrast, he said, large retailers such as Walmart are equipped to manage the change relatively easily.

Fry was among a panel of experts who joined us to discuss the June ruling on our podcast, The State of Business with The Ohio Society of CPAs. The court decision in South Dakota v. Wayfair overturns prior Supreme Court precedents from 1967 and 1992, both of which held that states could not require sellers to collect sales taxes unless they had a physical presence in that state. The Court concluded that each decision was an incorrect interpretation of the Commerce Clause.

Listen to the podcast now to hear more, including why the ruling might not be the boon for local business that some have predicted.

Also, join Fry next week at the Cleveland Accounting Show when he discusses pass-through entity taxation.

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