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Small Businesses: Here's How the U.S. Supreme Court Wayfair Decision Affects You
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If you are a small business owner, chances are good you’re paying more attention to your accounts receivables and deliverables than to a three-year-old Supreme Court decision. But knowing what happened in the Wayfair decision on June 21st of 2018 is important if you do a significant amount of business in states other than where you have a physical presence. The Wayfair decision reversed the earlier “Quill” decision made back in 1992, and in doing so it forever changed the tax liabilities of businesses. The Quill case established that businesses were not required to collect or remit sales or sellers use taxes for states in which they lacked a substantial physical presence. But the “burdensome” administrative processes that were eliminated with that decision became the law of the land with the Wayfair decision, which established economic nexus for the state of South Dakota as either 200 transactions shipped to state residents or companies per year, or $100,000. Once that threshold is reached, states can require out-of-state companies to collect and remit sales and use taxes from their customers. Compliance with these requirements is no small thing, and the earlier court decision was correct in referring to it as “burdensome.” But failing to comply has very real consequences in the form of back taxes and penalties. The solution is automation, almost by necessity: Without that kind of help, organizations would need at least one employee dedicated to nothing but managing and tracking sales volumes for each state as well as the various local and state regulations. To get an idea of exactly how complex the tax could be, consider this: There are approximately 10,000 different tax jurisdictions in the United States, and identifying all of them goes beyond anything as simple as zip code, county, or city borders. Though it would be nice to think that everybody adhered to standard taxability rules as is the case for SST member states, the fact is that each jurisdiction can have its own rules regarding what does and does not get taxed. Not only does this apply to product categories like clothing, food, or luxury items, but also to services such as shipping and handling or product usage. Each rule needs to be identified and adhered to, or risk fines and penalties. In addition to learning the rules and tax thresholds for nexus for each state, compliance requires adhering to the process that each state imposes. These are usually coordinated via state tax portals, meaning that sellers will need to have this information easily at hand – for as many as 50 states. And sellers will be responsible for tracking when tax requirements change, for every jurisdiction. Though some states offer resale exemption certificates, following the processes required to administer those certificates has turned out to be a bridge too far for many companies. Much of this is due to the fact that – as is true with other aspects of compliance – the certificates and rules for certificate renewals have to be collected and learned for each state and is an additional burden. But failure to properly fill the certificates out can lead to them being taxed on that revenue, and lead to penalties and interest being imposed if those taxes are not properly collected. Though following the rules represents an enormous headache and the need to invest time and money, doing so is preferable to being audited and penalized. By creating a strategy for dealing with these rules, you can not only eliminate your risk of non-compliance but also have a plan in place in case you do receive an audit letter. We strongly encourage you to contact us as soon as you receive an audit letter and do so before providing any response or submitting any information to a regional tax agency. We will be able to provide you with the information you need about how to best manage the situation.
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Tax and Financial Insights
by NR CPAs & Business Advisors
2026 IRS Mileage Rates: Key Updates and Insights
The IRS has rolled out the inflation-adjusted mileage rates for 2026, offering taxpayers an efficient way to claim deductions for vehicle-related expenses incurred for business, charity, medical, or moving purposes. These adjustments reflect the continued economic shifts impacting car operation costs.
Effective January 1, 2026, the new standard mileage rates are established as follows:
- Business Travel: Increased to 72.5 cents per mile, inclusive of a 35-cent-per-mile depreciation allocation. This marks a rise from the 70 cents per mile rate set for 2025
- Medical/Moving Purposes: Reduced slightly to 20.5 cents per mile, down from 21 cents in the previous year, reflecting the variable cost considerations.
- Charitable Contributions: Consistent at 14 cents per mile, a fixed rate unchanged for over a quarter-century.
As is typical, the business mileage rate considers the integral fixed and variable costs of automobile operation. Meanwhile, the medical and moving rates remain contingent on variable expenses as determined by the IRS study.
It is critical to note that the One Big Beautiful Bill Act (OBBBA) held firm on disallowing moving expense deductions except for specific cases within the Armed Forces and intelligence community, marking a substantial shift since 2017.
When engaging in charitable work, taxpayers might opt for a direct expense deduction over the per-mile method, covering gas and oil costs. However, comprehensive upkeep and insurance costs are non-deductible expenses.
Business Vehicle Use Considerations: Taxpayers can alternatively compute vehicle expenses using actual costs, which might benefit from shifting depreciation rules, particularly through bonuses and first-year advantages. Keep in mind, however, reverting from actual cost calculations to standard rates in subsequent years is restricted, particularly per vehicle protocol and when exceeding four vehicles in concurrent use.
Additionally, parking, tolls, and property taxes attributable to business can be deducted independently of the general rate, an often-overlooked advantage by many business owners.
Tax Strategies for Employers and Employees: Reimbursements based on the standard mileage framework, providing the right documentation is in place, remain tax-free for employees. Meanwhile, the elimination and continued prohibition of unreimbursed employee deductions continue, with particular exceptions offered to qualified personnel across specific occupations.
Opportunities for Self-employed Individuals: Entrepreneurs remain eligible for deductions on business-related vehicle use via Schedule C, with potential to account for business-use interest on auto loans.
Heavy SUVs and Deduction Advantages: Heavier vehicles exceeding 6,000 pounds but under 14,000 pounds open opportunities for substantial tax deductions through Section 179 and bonus depreciation avenues. The lifecycle of such a vehicle bears implications on recapturing initially claimed deductions, urging cautious tax planning.
For professional guidance on optimizing your vehicle-related tax deductions and understanding their implications on tax strategies, contact our office in Coral Gables, Florida, where expert advice and strategic insights are just a call away.
Educator's Deduction Reform: Key Changes Under OBBBA
The One Big Beautiful Bill Act (OBBBA) introduces significant enhancements for educators' tax deductions starting in 2026, offering both strategic opportunities and planning considerations for educators who qualify. With the reinstated itemized deduction for qualified unreimbursed expenses, educators have a broader spectrum of financial relief. This is complemented by the retention of the $350 above-the-line deduction, allowing educators to maximize their tax benefits by selectively allocating expenses between these avenues.
Understanding the nuances of these changes is crucial for educators and financial advisors alike. The dual-option deduction strategy can potentially enhance tax efficiency, thereby aligning with broader financial planning goals.
At NR CPAs & Business Advisors, based in Coral Gables, Florida, our expertise in tax preparation and planning provides invaluable support to educators navigating these changes. Our comprehensive approach, combined with personalized advice from our experienced team, ensures compliance and optimization in line with the latest tax legislations.
Given these updates, it is imperative to engage with seasoned professionals to fully leverage your deduction strategies. Contact us today to streamline your tax planning under OBBBA's new guidelines and maximize your deductions for upcoming tax years.
