High Court Tax Ruling Was a Jackpot for Software Companies

Scott McFarlane couldn’t have picked a more strategic time than last June for his online sales tax software company, Avalara Inc., to go public.

On June 21, just six days after the IPO, the U.S. Supreme Court handed down its South Dakota v. Wayfair ruling—which tossed out its 1992 physical presence standard, that had limited the ability of states to tax remote sales.

Since that ruling, about 30 states and Washington, D.C., have asserted their authority to require remote sellers to collect and remit taxes on transactions conducted remotely based on economic nexus—the South Dakota approach that looks at ...