More than seven years after the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc., businesses are still asking the same fundamental question:

“Do we have sales tax exposure in states where we don’t have a physical presence?”

In many cases, the answer remains yes.

Although the Wayfair decision is no longer new, its impact continues to evolve as states refine their rules, expand marketplace laws, and increase enforcement. For businesses with interstate sales, Wayfair is not a historical footnote; it is an ongoing compliance reality.

Here is a practical look at what the decision changed and what it still means for businesses today.

A brief refresher on the Wayfair decision:

Before 2018, states generally could not require a business to collect sales tax unless the business had a physical presence in the state, such as employees, property, or an office. This “physical presence” standard had governed sales tax compliance for decades.

In South Dakota v. Wayfair, Inc., the Supreme Court overturned that rule. The Court held that states may require remote sellers to collect and remit sales tax based solely on economic activity in the state, even without any physical footprint.

South Dakota’s law applied only to sellers exceeding clear thresholds: more than $100,000 in sales or 200 separate transactions into the state annually. The Court viewed those thresholds, along with protections against retroactive enforcement, as key safeguards.

Economic nexus is now the norm.

Following Wayfair, states moved quickly to adopt economic nexus standards. While the concept is straightforward, the execution is not. States vary widely in:

• Dollar thresholds and, in some cases, transaction thresholds
• Whether thresholds are based on gross sales, taxable sales, or specific product categories
• Measurement periods (prior year, current year, or rolling 12 months)

This lack of uniformity remains one of the most significant compliance challenges for businesses operating across multiple states.

Marketplace facilitators add another layer of complexity

Wayfair also accelerated the adoption of marketplace facilitator laws, which generally require online platforms to collect and remit sales tax on behalf of third-party sellers.

While these rules can simplify compliance, they often create confusion. Businesses still need to evaluate:

• When marketplace rules apply and when they do not
• How marketplace sales count toward economic nexus thresholds
• Whether direct (non-marketplace) sales trigger separate registration and filing obligations

Marketplace compliance is rarely “set it and forget it.”

Sales tax exposure often extends beyond the state level.

Although Wayfair focused on state-level sales tax, many states permit local jurisdictions to impose and administer their own taxes. Since the decision, economic nexus concepts have increasingly been applied at the local level, particularly in home rule states.

As a result, businesses may face obligations not only with state taxing authorities, but also with multiple local jurisdictions, each with its own rates, rules, and filing requirements. This is an area where unexpected exposure frequently surfaces during reviews, audits, or transactions.

Enforcement is becoming more active.

In the immediate aftermath of Wayfair, many states offered flexibility through voluntary disclosure programs and penalty relief. As time has passed, that grace period has largely ended.

Today, states have more data, better tools, and greater confidence enforcing economic nexus rules. For businesses that experienced rapid growth in e-commerce or remote sales, proactive review is increasingly critical.

What we encourage clients to focus on:

From an advisory standpoint, Wayfair is less about the court case itself and more about maintaining ongoing compliance discipline. Here are a few practical steps for you to consider:

• Periodically reviewing sales by state to identify economic nexus exposure
• Understanding how marketplace sales are treated in each applicable jurisdiction
• Evaluating whether current systems can handle multi-state rates, sourcing, and filings
• Addressing historical exposure before a state initiates contact

Every organization’s situation is different. A manufacturer, a construction company, and a service business may all sell across state lines yet face very different sales tax risks.

We’re here to help.

The Wayfair decision permanently reshaped the sales tax landscape. Economic nexus is no longer a developing concept; it is a standard part of doing business across state lines in 2026.

Our role as tax advisors is to help our clients understand where the risks exist, how the rules have evolved, and how to approach compliance in a way that is informed and manageable. If you are uncertain how Wayfair applies to your organization today, a thoughtful review can significantly reduce surprises down the road. Get in touch today to learn more. Looking for more tax guidance? Visit the 2025 Tax Hub for practical resources and answers to common questions.