Canadian Companies Face New U.S. Sales Tax Obligations
Canadian companies doing business in the United States will soon have to meet expanded requirements of U.S. states’ sales tax laws, due to the decision in a recent U.S. Supreme Court case. In South Dakota v. Wayfair, the Court overturned a previous decision and found that Canadian taxpayers, as well as other out-of-state taxpayers, that make sales in U.S. states must meet these states’ individual sales tax collection, compliance and documentation rules even if they do not have a physical presence in the state. Previously, only taxpayers with a physical presence in those states were subject to those states’ sales tax laws.
As a result of this decision, which was released on June 21, 2018, Canadian taxpayers should prepare to comply with any additional state sales tax obligations. This may mean making significant changes to meet new collection, compliance and documentation requirements in more than 7,000 U.S. jurisdictions.