As of September 14, 2018, the following states have issued guidance about when their new sales tax filing requirements will become effective (states highlighted in RED have been added since our August 16thAdvisory). These effective dates are:
Colorado – The Dept. of Revenue adopted emergency amendments to tax rules to provide guidance to retailers and consumers in light of the South Dakota v. Wayfair Inc. decision. According to the adopted language, an out-of-state retailer must apply for a Colorado sales tax license by Nov. 30, 2018 and begin collecting sales tax on Dec. 1, 2018. A qualifying out-of-state retailer is a retailer with $100,000 or more in gross sales or services delivered in Colorado or 200 or more transactions selling tangible property or services delivered in Colorado. This announcement may prove troublesome for out-of-state retailers, as Colorado is one of a handful of states that allow localities to administer and collect their own sales tax. This potentially creates the need to register, collect tax and file returns in multiple “home rule cities” including Aurora, Boulder, Colorado Springs, Denver, Fort Collins and Lakewood among others. It is unclear how or when these home rule cities will determine what sales tax filing requirements apply to out-of-state retailers selling to customers in their jurisdictions. Because there are two separate tax bases in Colorado (state and local), local taxation could be considered unconstitutional as it differs significantly from the nature of the South Dakota law examined in Wayfair.
Maryland – The General Assembly approved an “emergency regulation” requiring remote sellers with more than $100,000 in sales or engaging in more than 200 sales transactions to register and begin collecting sales tax starting Oct. 1, 2018.
South Dakota – A special legislative session was held on Sep. 12, 2018 to consider legislation expediting the implementation of sales tax filing requirements to remote sellers. There is still an injunction in place barring the State for enforcing their remote seller law as it’s making its way through the state court system after being remanded by the U.S. Supreme Court for further debate. The legislature passed two bills, one removing the injunction against all remote sellers, except for the defendants in the South Dakota v. Wayfair Inc., allowing the State to require remote sellers to register and begin collecting and remitting sales tax starting Nov. 1, 2018. The other bill requires marketplace providers to who meet certain thresholds to obtain a sales tax license and remit applicable sales tax on all sales it facilitates, effective Mar. 1, 2019.
Not all of above states have implemented the same sales tax nexus thresholds as South Dakota. The following states have imposed different thresholds:
Alabama, Mississippi – Remote sellers with annual in-state sales in excess of $250,000 small seller exception should register and collect sales tax (based on total sales into the state in the prior twelve-month period).
Connecticut – A retailer must collect and remit sales tax if in-state sales exceed a threshold of 200 transactions during the preceding twelve-month period and gross receipts are $250,000 or more during that same period.
Georgia – Sellers making 200 or more sales of tangible personal property or having gross revenue exceeding $250,000 in the previous or current calendar year from sales of tangible personal property delivered electronically or physically in Georgia are required to register to collect and remit sales tax in Georgia or comply with notice and reporting requirements.
Minnesota – Remote sellers with 100 or more retail sales shipped to the state or 10 or more retail sales shipped to the state that total more than $100,000 during a period of twelve consecutive months, must register and begin collecting sales tax.
Oklahoma – A remote seller with at least $10,000 in aggregate in-state sales in the preceding twelve-month period must either file an election to obtain a sales tax permit and collect and remit sales tax due on tangible personal property or comply with notice and reporting requirements.
Washington – Beginning January 1, 2018, remote sellers making $10,000 or more in retail sales to Washington purchasers had to choose between registering their business and collecting and remitting sales/use tax due on in-state sales or comply with notice and reporting requirements. Beginning October 1, 2018, remote sellers making either $100,000 or more in sales to or 200 transactions with in-state purchasers must register their business and collect/submit retail sales/use tax on those sales.
In addition to these jurisdictions, a host of other states, including Massachusetts, Ohio, Pennsylvania, Rhode Island, Tennessee (barred by injunction) and Wyoming (effective date pending) previously enacted expanded sales tax nexus legislation that impacts filing requirements for remote sellers. These policies vary by state, and we are anticipating additional guidance from these states’ taxing authorities regarding sales tax collection implications for remote sellers. Other states, including California, New York and Texas are reviewing the Wayfair decision to determine the potential sales tax implications for remote sellers in their jurisdictions.
Tronconi Segarra & Associates will continue to track the latest state-by-state sales tax developments related to the Wayfair decision and will issue further advisories as additional states indicate how they will be addressing this unprecedented shift in sales tax compliance. For more information, please contact a member of our State and Local Tax team or check our Wayfair page at www.tsasalt.com.