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 states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-six (26) states.
We highlight some of these below:
- States Will Adopt Marketplace Nexus Provisions –NY, SC, IN, CA, UT
- South Carolina - Beginning April 26, 2019, SB 214 provides that marketplace providers (listing products on a marketplace and billing and collecting from the purchaser) are required to collect 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.
- New York – Beginning June 1, 2019, SB 1509 codifies New York’s long-held audit position that marketplace providers are co-vendors are required to collect sales tax if, in the previous four quarters, it had aggregate sales of property to New York customers exceeding $300,000 AND 100 transactions, or otherwise has physical presence nexus.
- Indiana – Beginning July 1, 2019, HB 1001 provides that marketplace providers (providing a marketplace and doing any of the following: collecting the purchase price, charging/collecting a fee for using the marketplace or providing payment processing) are required to collect 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.
- California – Beginning October 1, 2019, AB 147 provides that that marketplace providers (listing products on a marketplace and billing and collecting from the purchaser) are classified as the retailer and are required to collect sales tax if, in the previous or current calendar year, it had aggregate sales exceeding $500,000, or otherwise has physical presence nexus.
- Utah - Beginning October 1, 2019, SB 168 provides that that marketplace providers are required to collect 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.
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.