In the wake of the Supreme Court’s landmark decision in South Dakota v. Wayfair, Inc. on June 21, 2018 overturning the physical presence nexus standard for sales tax, many states have been moving quickly to implement new sales tax filing requirements similar to the legislation enacted in South Dakota that does not require a seller have physical presence in the state. South Dakota passed legislation in 2016 requiring “remote sellers” who engaged in more than 200 or more separate transactions or exceeded $100,000 of annual sales in the state to register and collect sales tax. (A remote seller is any business that sells products or services to customers in a state using the internet, mail order, or telephone without having physical presence in that state.)
A number of states have passed legislation similar to the South Dakota law in the past two years as well, while other states just recently adopted new regulations or issued administrative pronouncements, updating their sales tax filing requirements in a similar manner. As of September 7, 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 16th Advisory). These effective dates are:
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.
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 Colorado, Massachusetts, Ohio, Pennsylvania, Rhode Island, Tennessee (barred by injunction) and Wyoming (pending effective date) 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.