Many companies do business in multiple states in the U.S. What they might not be aware of is that tax regulations in each state might mandate them to collect and pay sales and use tax for transactions in those states. This is true even if the company does not have a physical presence in that state. In this episode, we're taking a look at the specific laws that every business owner should know in order to remain compliant with state tax regulations. Joining me for this insightful conversation is tax expert and attorney, Justin Hepworth.

Justin is a partner in the Tax and Estate Planning Practice Group in Sheppard Mullin's Orange County office. His practice encompasses a broad range of state and local tax matters, from planning, compliance, and transactional matters to controversy matters in audit and through litigation. Justin regularly advises clients on state and local tax implications of restructurings, mergers, acquisitions, spinoffs, and asset sales. He advises on audit defense, voluntary disclosure, unclaimed property (escheat law), and other controversy and compliance matters. He has extensive experience handling a broad range of multistate issues, including nexus, sales and use tax exemptions, sourcing and characterization, research and development credits, unitary business matters, California Prop. 13 change in ownership issues, and residency planning and audits.

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What We Discussed in This Episode:

  • What is the significance of the 2018 Supreme Court case of South Dakota v. Wayfair, Inc.?
  • What is the "physical presence" test and how was it challenged by the South Dakota case?
  • How does a Court have authority to decide cases under the Commerce Clause?
  • What is "economic nexus" and how does it apply to companies in today's economy?
  • Do state sales and use taxes only apply to the sale of physical goods in a state?
  • What about foreign companies doing business in the U.S.? Do they have to pay sales taxes in every U.S. state they do business in?
  • How do sales and use taxes affect mergers and acquisitions?
  • What are "marketplace facilitator laws"?
  • Is there an exodus from California?

Resources Mentioned:

South Dakota v. Wayfair, Inc. (2018)

Contact Information:

Justin's Sheppard Mullin attorney profile 

Thank you for listening!

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