In a recent Law360 article, tax controversy counsel Elizabeth Smith, health care partner Jennifer Romig, health care associate Whitney Wadman and tax and benefits law clerk Jenna Grove examine how digital health companies can diagnose sales tax rules.

As digital health technologies and sales tax regimes evolve, digital health companies must evaluate their sales tax collection obligations. Companies may face significant exposure for uncollected sales tax, as the payment obligation shifts to the seller if it fails to collect and remit the tax at the time of the sale.

The authors explain that taxing authorities are becoming increasingly aggressive during sales tax audits, emboldened by the U.S. Supreme Court’s South Dakota v. Wayfair Inc. ruling, in recent state court decisions regarding the taxation of the digital economy, and their own regulatory guidance.

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