Back to School: Sales Tax Nexus Lessons

No doubt, it is not always clear whether a seller has a physical presence in a state and must therefore collect sales tax from customers in that state. Certainly, if they have a building or a regular sales staff in a state, they have a physical presence, but today's ways of doing business require fewer buildings and sales personnel. Thus, there is greater likelihood of it not being clear if they have a physical presence..

Recent cases in Connecticut and Tennessee involving Scholastic Book Clubs illustrate well the confusion as to whether a seller has a physical presence in the state. For Scholastic, the issue was whether the teachers who hand out and mail in student order forms cause Scholastic to have to collect sales tax. Rulings on this issue have been inconsistent. The lower court in Connecticut reached a different conclusion than the higher court.

For more on this topic and links, please see a recent post at my salestaxsupport.com blog which has a bit more background and a link to a 8/20/12 AICPA Corporate Taxation Insider article on the topic. That article also includes a table of all of the Scholastic and Troll Book cases and their holding.

What do you think?  Are the teachers who hand out the order forms, collect payment and distribute the books, crease a physical presence for Scholastic?