SALT Insights: Are You a Responsible Person?

Exposure to personal liability for unpaid sales taxes is at an all-time high since the U.S. Supreme Court issued its 2018 South Dakota v. Wayfair decision. In this landmark sales tax case, the court removed physical presence as the primary means for establishing nexus in a state. 

Since that decision, all but two states that collect sales tax have enacted their own economic nexus standards for remote sellers. Most states provided a grace period for businesses to register and become compliant, but those periods have expired. 

With each passing month, companies are racking up increasing tax liabilities if they have not complied by registering, collecting and remitting sales taxes in all the states where they now have nexus.

Businesses defining their approach to sales tax compliance should know that states have the ability to make individuals personally liable for uncollected or unremitted sales taxes. If a company is unable to pay its sales tax liabilities, some states may pursue collection from the owners, officers, shareholders, directors or even employees whose responsibilities included preparing returns and remitting sales tax collections.

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