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:
- 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.
- 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.