State and Local Tax Services for Multi-State Businesses

In South Dakota v. Wayfair, Inc., the Supreme Court rejected a physical-presence requirement for sales tax collection. It did not establish one nationwide threshold. States differ in sales amounts, transaction counts where applicable, measurement periods, included sales, and registration or collection start dates.

A SALT review compares sales records and fulfillment locations with each state's requirements, including how marketplace transactions and exempt sales count. Physical operations may create nexus even below an economic threshold.

Companies should distinguish direct sales from marketplace transactions and determine when applicable thresholds were first exceeded. This timeline may affect registration obligations, prior returns, and the need to evaluate voluntary disclosure.

Remote employees and inventory can raise income or franchise tax questions independently of sales tax. Public Law 86-272, 15 U.S.C. § 381, restricts certain state net income taxes when in-state activities consist of qualifying solicitation of orders for tangible personal property, accepted and fulfilled outside the state. It does not generally shield SaaS or service revenue, sales tax collection, or activities beyond protected solicitation.

Attorneys can examine employee duties, contracts, and delivery arrangements before a business registers or evaluates earlier filing periods.

Some states use a single-sales-factor formula; others apply different factors or industry-specific rules. Sales of goods and receipts from services or intangible property may follow different sourcing methods. California, for example, generally applies a single-sales-factor formula and market-based sourcing for services, subject to exceptions.

Legal review compares contracts, customer locations, and revenue records with the rules of each state involved. When a customer's billing address differs from where services are received, additional records may be needed to support the sourcing position. Revenue from bundled contracts may also require separate classification.

Combined reporting may apply to qualifying affiliated corporations that operate as a unitary business. Common ownership alone does not resolve the question. An attorney can review group structure, operational integration, intercompany arrangements, and applicable state inclusion rules.

Acquisitions, reorganizations, or changes in shared management may affect the reporting analysis. Reviewing corporate structures by tax period can help identify whether earlier returns require separate consideration.

New York generally taxes remotely accessed prewritten software. California's treatment of qualifying electronic software deliveries has differed, with new digital-product rules scheduled for January 1, 2027. The transaction date and precise product or service matter. Contracts and invoices help determine whether a charge covers software access, data processing, or another service.

A subscription agreement combining software access with consulting or technical support may require closer examination. Tax treatment depends on the applicable classification and bundling rules, while sourcing determines where the taxable transaction is assigned.

A platform may collect tax on covered marketplace sales, but sellers can retain obligations for direct sales, registration, records, or other taxes. Marketplace receipts may also count toward an economic nexus threshold. Attorneys can reconcile platform reports and direct-sales records to identify remaining duties.

Businesses selling through several platforms should confirm which transactions each platform covers and retain supporting collection records. Platform tax reports do not necessarily establish the seller's complete filing position.

A voluntary disclosure agreement (VDA) may allow an eligible business to resolve unreported taxes, subject to state-specific conditions. Prior tax-authority contact, lookback periods, penalties, and interest all matter. Collected but unremitted tax may be excluded from ordinary relief. VDA programs are not the same as temporary tax amnesty programs.

An attorney can assess eligibility and exposure before an application, without assuming penalties or interest will be waived. Reviewing previous returns, payments, and agency inquiries is important because prior contact concerning the same tax type may affect eligibility.

Legal support may include responding to audit requests, disputing nexus or sourcing calculations, and preparing protests or refund claims. Deadlines, administrative review, and refund interest depend on the state and tax type; discussions with an auditor do not necessarily extend a protest period.

An audit response may require transaction-level records, exemption certificates, and reconciliation of reported receipts. Attorneys can examine the assessment methodology and available review procedures before determining whether to contest the proposed liability.