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Blog: Dillon Tax Consulting

marketplace

Economic Nexus Update: July 8, 2020 – TN, LA, IL

7/8/2020

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now continue to be that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted Tennessee and Louisiana legislation imposes compliance obligations on marketplace facilitators.  In addition, recent Tennessee legislation reduces the economic nexus threshold for remote sellers and remote marketplace facilitators, while Louisiana and Illinois have changed or reiterated the compliance obligations impacting remote ...

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Economic Nexus Update: July 2, 2019 – CO, CT, IL, ME, NY

7/2/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now are that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted New York legislation increases the economic nexus threshold for remote sellers and remote marketplace providers, while Connecticut reduces its threshold.  Colorado codifies its Department’s rules and Maine and Illinois adopt marketplace facilitator provisions.

We highlight some of these below:

  1. States Adopt ...
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Economic Nexus Update – AZ, MD, OK, MN

6/5/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  Arizona and Oklahoma are most recent states to enact an economic nexus provision for remote sellers.

Since last reporting on this subject in early May, we have also seen two (2) more states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-eight (28) states.  Furthermore, recently enacted Minnesota legislation changes the economic nexus ...

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Economic Nexus Update – CA, NY, SC, IN, UT

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
5/16/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-two (42) states have adopted economic nexus provisions for sales tax compliance purposes.  The most compelling change for states that have adopted economic nexus is that California has enacted Assembly Bill 147, which increases the economic nexus threshold for remote sellers to $500,000 in annual sales from the previously adopted $100,000 threshold, and removes the transaction count threshold.

Since last reporting on this subject in mid-April, we have also seen five (5) more ...

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Economic Nexus Update – ID, RI, KY, VA, AR, NM, WV, WY, ND, HI

4/19/2019

Since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-two (42) states have adopted economic nexus provisions for sales tax compliance purposes.  With the state legislative sessions in full swing, we are seeing the predictions become a reality.  The most compelling change is the expected upswing in the number of states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-one (21) states.  We highlight some of these below:

 

  1. States Will Adopt Economic Nexus – ID, VA, AR, NM

  • Idaho – Beginning June ...
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Recent Blog Articles

Recent Blog Articles

State Economic Nexus Standards

State Economic Nexus Standards

7/4/2021 12:00:00 AM EDT
2 weeks ago

State Economic Nexus Standards - UPDATED AS OF 7/3/2021

In the wake of the U.S. Supreme Court's decision in South Dakota v. Wayfair, states may now require remote sellers with no physical presence in a state to collect sales tax on sales of taxable products and services delivered to customers in that state.  This ruling does not simply affect online retailers, but all sellers of taxable goods and services who make sales into state in which they lack physical presence.  Attached as an informational reference tool is a listing of the states that have adopted some form of economic nexus standard.  

 

State Marketplace Facilitator Compliance Standards - UPDATED AS OF 7/3/2021

Since Washington State first adopted a requirement that marketplace providers must collect and remit sales tax directly to the Department for all sales made on their marketplace, all states have chosen to impose sales tax compliance obligations on marketplace providers or facilitators. Attached as an informational reference tool is a listing of the states that have adopted some form of a marketplace facilitator nexud and compliance standard.  Though the deifnition of a marketplace facilitator must be determined on a state by state basis (and is beyond the scope of this article), typically a marketplace facilitator is a business that provides a forum or platform on which third party sellers can advertise and sell their products, and on which the marketplace also provides billing and collection (directly or indirectly), or sets prices, or provides inventory storage and/or fulfillment services, among other things. The more recent trend among states, including California, is to adopt a broader definition of “marketplace facilitator”, including any business that lists a marketplace seller’s items for sale on their platforms.

 

State Notice & Reporting Requirements

A number of states have also adopted Notice & Reporting Requirements, which compel remote sellers, typically whose annual sales exceed a certain threshold - often as low as $10,000 - to elect to either (1) to collect and remit sales tax on sales to customers in the state, despite lacking a physical presence, or (2) to notify customers on their website and on each invoice of the customer’s use tax reporting obligation, and to provide annual information to each customer and to the Department of Revenue regarding all sales customers in the state.  Failure to do so results in penalties that typically are larger than the remote sellers sales in that state.  For your consideration, attached as an informational tool is a listing of the states that have adopted notice and reporting requirements.

 

WHAT YOU MUST KNOW

As such, it is incumbent on every remote seller to proactively engage someone - externally or internally - to closely monitor these and every state regarding implementation and enforcement of these provisions.  Furthermore, every remote seller should implement processes to proactively monitor its sales activity - by revenue and transaction amount - both historically and prospectively, to ensure that they are meeting their obligations in each state and mitigating any historical exposure.  Lastly, to the extent that a remote seller has or had physical presence nexus in a state (eg., by virtue of inventory in a third party fulfillment center), that seller should engage an expert to discuss the options to register and/or negotiate resolution of historical liabilities. 

Maryland imposes sales and use tax on the sale of software and digital products

Maryland imposes sales and use tax on the sale of software and digital products

3/9/2021 12:00:00 AM EST
4 months ago

Maryland will begin imposing sales tax on the sale of digital products, starting March 14, 2021.  This is an abrupt change in tax policy for a state that has historically steered away from imposing sales tax on electronically delivered and remotely accessible software, digital products, and cloud-based data and information services.  These changes may be found primarily in Maryland Tax Code Sections 11-101(h) and 11-101(n).

The Comptroller’s office has published guidance on HB 932 21st Century Fairness Act which imposes sales and use tax on the sale of digital products.  The guidance can be found here:

 

City of Chicago Economic Nexus “Safe Harbor”, effective July 1, 2021

City of Chicago Economic Nexus “Safe Harbor”, effective July 1, 2021

1/26/2021 12:00:00 AM EST
5 months ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states (all except Florida and Missouri) have adopted economic nexus provisions for sales tax compliance purposes.  Even the Alaskan local jurisdictions have gotten in on the action, adopting an intergovernmental agreement to establish a Commission that will provide governance over a streamlined, single-level administration of sales tax collection and remittance. 

Economic Nexus Update: July 8, 2020 – TN, LA, IL

Economic Nexus Update: July 8, 2020 – TN, LA, IL

7/8/2020 12:00:00 AM EDT
1 years ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now continue to be that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted Tennessee and Louisiana legislation imposes compliance obligations on marketplace facilitators.  In addition, recent Tennessee legislation reduces the economic nexus threshold for remote sellers and remote marketplace facilitators, while Louisiana and Illinois have changed or reiterated the compliance obligations impacting remote sellers and marketplace facilitators in these states. 

Where States Will Turn for Revenue in Response to Declining Sales Tax Collections?

Where States Will Turn for Revenue in Response to Declining Sales Tax Collections?

5/27/2020 12:00:00 AM EDT
1 years ago

The Current State of Things

As I predicted in my March 25th post, Sales Tax Strategies During the Economic Disruption of the COVID-19 Outbreak, every state is revising its FY 2020 revenue forecasts in response to declining tax collections for March and April.  [https://www.ncsl.org/research/fiscal-policy/coronavirus-covid-19-state-budget-updates-and-revenue-projections637208306.aspx]  As reported by the National Conference for State Legislatures, some examples of these shortfalls include:

  • FloridaOffice of Economic & Demographic Research reported sales tax collection came in $12.4 million or .58% below monthly estimates. 
  • Illinois: Current fiscal year general fund revenues were revised to $2.7 billion below February estimates of $36.9 billion by the Governor's Office of Management and Budget (GOMB).
  • Maryland: Comptroller Peter Franchot and the Bureau of Revenue Estimates outlined a shortfall of approximately $2.8 billion during the final quarter of FY 2020. The economic shutdown could also result in a loss of 59% of all sales tax revenue in a month, or almost $250 million.  
  • New York: In a letter to Governor Andrew Cuomo (D), State Comptroller Thomas DiNapoli estimated tax revenue would be between $4 billon and $7 billion below projections for fiscal year 2020. New York’s fiscal year ended on March 31. 
  • Pennsylvania: According to the Independent Fiscal Office (IFO), April revenue collections were down by $2.16 billion, or 49.8% less than projections released in August 2019. Sales and use tax collections fell short of estimates by $357.3, or 35.9%.
  • Texas: Texas Comptroller Glenn Hegar reported April state sales tax revenue dropped by 9.3% from April 2019, the state's steepest decline since January 2010. Sales tax revenue accounts for 57% of all tax collections in Texas.

Sales Tax Strategies During the Economic Disruption of the COVID-19 Outbreak

Sales Tax Strategies During the Economic Disruption of the COVID-19 Outbreak

3/25/2020 12:00:00 AM EDT
1 years ago

As we all hunker down or at least change our daily routines to include working from home and social distancing amidst the COVID-19 outbreak, the economy struggles to adapt to the acute and devastating change in business and consumer spending.  While the U.S. and global economy is dynamic and will undoubtedly adapt and recover from the impact, for purposes of this discussion, we reference the impact that recessions have on state tax revenue collections and what states have done to address reduced tax revenue.  We then consider the proactive measures companies should be taking now to enhance sales tax compliance processes and minimize risk and liabilities.   

Economic Nexus Update: July 2, 2019 – CO, CT, IL, ME, NY

Economic Nexus Update: July 2, 2019 – CO, CT, IL, ME, NY

7/2/2019 12:00:00 AM EDT
2 years ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now are that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted New York legislation increases the economic nexus threshold for remote sellers and remote marketplace providers, while Connecticut reduces its threshold.  Colorado codifies its Department’s rules and Maine and Illinois adopt marketplace facilitator provisions.

We highlight some of these below:

  1. States Adopt or Modify Economic Nexus Provisions – CO, CT, NY
  • Colorado – Effective June 1, 2019, HB 1240 codifies rules previously enforced by the Department of Revenue relating to economic nexus, marketplace nexus and sourcing.  As such, the legislation codifies that economic nexus applies to out-of-state retailers with over $100,000 in sales into Colorado during the last calendar year. If the sales threshold was not met in the last calendar year, once it is met during the current calendar year, the retailer has 90 days from the time it is met to start collecting and remitting.  In addition, the legislation adopted destination sourcing for sales to Colorado customers.  As such, sales tax rates and collections are based on the customer location to which items are shipped or picked up by the customer.
  • Connecticut – Beginning July 1, 2019, HB 7424 reduces the economic nexus threshold from $250,000 to $100,000 in sales of tangible personal property delivered in New York.  The additional requirement of more than 200 sales delivered in Connecticut remains the same.  The measurement period remains the prior twelve months.  The legislation also eliminates the condition that such retailers be regularly or systematically soliciting sales in Connecticut.   The same threshold now applies for click-through nexus, which had previously also been $250,000 in gross receipts as a result of a referral agreement with a Connecticut person.
  • New York – Retroactively applied back to June 21, 2018, SB 6615 increases the economic nexus threshold from more than $300,000 to more than $500,000 in sales of tangible personal property delivered in New York.  The additional requirement of more than 100 sales of tangible personal property delivered in New York remains the same.  The measurement period remains the immediately preceding four sales tax quarters.

 

  1. States Adopt or Modify Marketplace Nexus & Compliance Provisions – CO, IL, ME, NY
  • Colorado – Beginning October 1, 2019, HB 1240 provides that marketplace facilitators are required to collect and report sales tax if they had over $100,000 in sales into Colorado during the last calendar year.  For purposes of the legislation, a marketplace facilitator is an entity that facilitates sales of marketplace sellers to purchasers on its platform and that may retain a fee for its service. The marketplace facilitator also communicates the offer between the buyer and seller; and provides a payment processing service for both parties.  In addition, the legislation adopted destination sourcing for sales to Colorado customers.  As such, sales tax rates and collections are based on the customer location to which items are shipped or picked up by the customer.
  • Illinois - Beginning January 1, 2020, P.A. 101-09 provides that marketplace facilitators are required to collect and report sales tax if, in the previous twelve months, it had aggregate sales of $100,000 or 200 transactions, or otherwise has physical presence nexus. For purposes of this legislation, a marketplace is any physical or electronic place used to sell items for marketplace sellers, through which the marketplace facilitator lists a marketplace sellers items for sale through its marketplace; and processes sales or payments for marketplace sellers.  Each quarter, a marketplace facilitator must determine if it meets either threshold for the prior 12 month period.
  • Maine - Beginning October 1, 2019, HP 1064 provides that all marketplace providers are required to collect and remit tax on sales they facilitate if they have  more than $100,000 in annual gross sales into Maine; or at least 200 separate sales transactions in Maine.  For purposes of this legislation, a marketplace facilitator facilitates retail sales by listing, advertising, or processing orders for tangible personal property or taxable services for sale by marketplace sellers.  Marketplace sellers meeting these thresholds must also register.
  • New York – Retroactively applied back to June 1, 2019, SB 6615 increases the economic nexus threshold for marketplace providers from more than $300,000 to more than $500,000 in sales of tangible personal property delivered in New York.  The additional requirement of more than 100 sales of tangible personal property delivered in New York remains the same.  The measurement period remains the immediately preceding four sales tax quarters.

 

We will continue to monitor these state legislative and administrative changes as they impact sales tax nexus and compliance obligations for remote sellers, and have updated the Economic Nexus Reference Tools on our website for you.

Economic Nexus Update – AZ, MD, OK, MN

Economic Nexus Update – AZ, MD, OK, MN

6/5/2019 12:00:00 AM EDT
2 years ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  Arizona and Oklahoma are most recent states to enact an economic nexus provision for remote sellers.

Since last reporting on this subject in early May, we have also seen two (2) more states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-eight (28) states.  Furthermore, recently enacted Minnesota legislation changes the economic nexus threshold for remote sellers and remote marketplace providers.

We highlight some of these below:

  1. States Adopt or Modify Economic Nexus Provisions – AZ, OK, MN
  • Arizona - Beginning October 1, 2019, HB 2757 provides that remote sellers are required to collect and report sales tax if, in 2019 they have aggregate sales of tangible personal property exceeding $200,000 (this number reduces to $150,000 in 2020 and $100,000 in 2021), or otherwise has physical presence nexus.
  • Oklahoma – Beginning November 1, 2019, SB 513 provides that remote sellers are required to collect and report sales tax if, during the during the preceding or current calendar year, they have aggregate taxable sales of tangible personal property of $100,000 or more.
  • Minnesota - Beginning October 1, 2019, HF 5 changes the economic threshold for remote sellers and remote marketplace providers to 200 or more retail sales during the prior 12-month period; or retail sales totaling more than $100,000 during the prior 12-month period.  Furthermore, all marketplace providers are required to collect and remit tax on sales they facilitate unless a retailer provides the marketplace provider with a copy of its registration to collect the tax, and the marketplace provider and retailer agree that the retailer will collect the tax on these sales.  Nothing prohibits the retailer and marketplace providers from entering into an agreement about who will collect and remit the tax.

 

  1. States Adopt or Modify Marketplace Nexus & Compliance Provisions – AZ, MD, MN
  • Arizona - Beginning October 1, 2019, HB 2757 provides that marketplace providers (listing products on a marketplace and billing and collecting from the purchaser) are required to collect and report sales tax if it has aggregate sales exceeding $100,000, or otherwise has physical presence nexus.
  • Maryland - Beginning October 1, 2019, HB 1301 provides that marketplace providers are required to collect and separately report sales tax if, in the previous or current calendar year, it had aggregate sales exceeding $100,000 or 200 transactions, or otherwise has physical presence nexus. The marketplace
  • Minnesota - Beginning October 1, 2019, HF 5 changes the economic threshold for remote sellers and remote marketplace providers to 200 or more retail sales during the prior 12-month period; or retail sales totaling more than $100,000 during the prior 12-month period.  Furthermore, all marketplace providers are required to collect and remit tax on sales they facilitate unless a retailer provides the marketplace provider with a copy of its registration to collect the tax, and the marketplace provider and retailer agree that the retailer will collect the tax on these sales.  Nothing prohibits the retailer and marketplace providers from entering into an agreement about who will collect and remit the tax.

 

We will continue to monitor these state legislative and administrative changes as they impact sales tax nexus and compliance obligations for remote sellers, and have updated the Economic Nexus Reference Tools on our website for you.