Companies doing virtual business in states with an ‘economic nexus’ law
Relevant dates
Effective immediately.
Key impacts
On June 21, 2018, the Supreme Court overturned its previous decision that a state cannot require a business to collect sales and use taxes from customers in states where the business has no physical presence
The decision paves the way for states that have adopted an economic nexus law to begin requiring the collection of sales and use taxes if the law does not otherwise violate constitutional principles
While the Court did not resolve all issues in its decision, it is clear that businesses that do not collect and remit sales and use taxes cannot continue to rely on not having a physical presence when doing business in states with economic nexus laws
We believe that those companies will need to consider whether the Court’s decision means that they will need to recognize financial statement liabilities and provide additional disclosures
Report contents
Applicability
Key facts and impacts
Financial reporting implications – Obligating event has occurred