by Mike Godfrey, Tax-News.com Washington
27 September 2019
Many US states will begin to impose sales and use tax obligations on remote sellers and marketplace facilitators from October 1, 2019, largely in response to the United States Supreme Court’s landmark decision in the Wayfair case.
On June 21, 2018, the Supreme Court overturned the physical presence test set by the pre-internet Quill decision which held that states cannot force sales tax collection obligations on vendors who do not have personnel or property in the state.
The case, South Dakota v. Wayfair, Inc, involved an examination of a South Dakota sales tax law that requires collection of the state’s sales tax by internet vendors with at least 200 transactions or USD100,000 in sales to South Dakota residents.
The Supreme Court judges agreed that the South Dakota sales tax law is lawful and observed that physical presence “is not necessary to create a substantial nexus.” The court also said that advances in information technology mean that states sales taxes are now unlikely to unduly burden interstate commerce.
Prior to and after the Wayfair decision, numerous state government prepared and legislated for economic nexus laws to allow remote sellers and marketplace facilitators with sales above certain thresholds (usually sales of at least USD100,000 or transactions exceeding 200 per year, depending on the state) to fall within the scope of sales taxation. Many of these have already entered into effect, with several more states to set to introduce changes aimed at taxing remote sales.
The following states are set to bring into force sales tax registration requirements on remote sellers on October 1, 2019:
- Arizona;
- Massachusetts;
- Tennessee; and
- Texas.
The following states will bring into force sales tax registration and reporting obligations on marketplace facilitators – those who host suppliers listings – on October 1, 2019:
- Arizona;
- California;
- Colorado;
- Maine;
- Maryland;
- Massachusetts;
- Nevada;
- North Dakota;
- Texas;
- Utah; and
- Wisconsin.