How the US sales and use taxes will impact UK sellers

No primary category set

The recent South Dakota v. Wayfair ruling, which will allow US States to collect US sales and use taxes from ‘remote sellers’, could have wide-reaching implications for international retailers. This is according to ecommerce specialist Tryzens, who has warned that UK retailers must study the rapidly evolving US tax regime carefully and ensure that their ecommerce platforms are flexible enough to accommodate State by State variability, to avoid getting burnt by the ruling.

The Supreme Court of the United States ruled that the physical presence rule for State tax jurisdiction is incorrect and not a requirement under the Commerce Clause of the US Constitution. This in effect means that individual States will be able to collect US sales and use taxes including from out-of-State sellers, overturning a decades-old Supreme Court decision which said sellers only had to collect State sales taxes if they had a warehouse or office in the State.

Although it remains to be seen how the ruling will be applied from State-to-State and internationally, individual States may attempt to assert taxing rights over foreign-based companies that lack a physical presence in that particular State.

Implications of the US sales and use taxes ruling for UK retailers

“Faced with a market that is increasingly mature, many UK retailers are looking to break into new territories, like the US, and the beauty of ecommerce is that they can do so with little to no physical infrastructure, albeit with other technical and fulfilment challenges. But the Wayfair ruling is a real paradigm shift and creates a precedent that is likely to run on. Retailers will need to do more thorough due diligence on how to accommodate these changes relating to ‘remote sellers’ as the picture evolves over time, State by State, in order to be able to comply with the new tests, which are known as ‘economic nexus standards’. Whilst there is still a lot of ambiguity about how this will work in practice, UK retailers that sell in to the US would do well to start preparing for the changes ahead.”
– Andy Burton, CEO, Tryzens

45 States in the US collect sales taxes, and, to make things more complicated still, sales tax rates differ from State-to-State. UK retailers will need to ensure that these differences are accommodated for in their eCommerce platforms and CRM systems, as well as considering pricing implications due to the variability of the rates by State to stay on the right side of the IRS.

One Response

  1. The article posts a great question, but then barely makes an attempt to answer it.

    It would be really beneficial to get a bit of insight on;

    1) Whether UK FBA sellers holding inventory in the US will need to register for sales tax as a result of this ruling (sources elsewhere say – yes)

    2) Whether UK sellers sending goods from the UK to the US will be implicated in this ruling (sources elsewhere say – no)*

    We’re in position number 2) as our products are quite popular in the US on eBay!



The argument against online sales tax


Voice of Small Business Survey from Amazon Marketplace


UK Gov Online Sales Tax (OST) consultation


New year, potential new UK Online Sales Tax


UK online sales tax would be a barrier to entrepreneurship

ChannelX Guide...

Featured in this article from the ChannelX Guide – companies that can help you grow and manage your business.


Take a look through a selection of the latest articles on ChannelX

Register for Newsletter

Receive 5 newsletters per week

Gain access to all research

Be notified of upcoming events and webinars