![]() Other states, by the nature of the statutory and regulatory structure, apply the threshold to all receipts from the state. Some states have provided guidance on whether an exempt or excluded sale should be included. Florida economix nexus law how to#One consideration for remote sellers who sell for resale or sell mostly exempt property and services is determining when and how to calculate the threshold for purposes of a state’s economic sales tax nexus law. Middle-market remote seller considerationsĭo excluded or exempt sales count towards the threshold? Does the marketplace have the legal liability to collect the tax? How are marketplace sales treated for purposes of determining whether the seller has exceeded a Wayfair threshold for direct sales made outside of the marketplace? These questions will linger until the states can provide the appropriate guidance or legislative clarity – efforts likely hampered by the COVID-19 pandemic in 2020. For example, sellers using the marketplace may be unsure of how to report or evidence marketplace sales to states where they are already registered. In some cases, facilitators may be required to collect certain state and local excise taxes or fees that would normally apply in addition to any sales taxes.įinally, many implementation questions remain with little guidance from the states to assist taxpayers. Recently, more states have amended their marketplace provisions to provide clarity on whether the tax applies to vehicle rentals, restaurant and food aggregation platforms, lodging and accommodation rentals, and local taxes. Many states have adopted broad statutory definitions of marketplaces, in some cases resulting in more than one party to a transaction qualifying as a marketplace. Marketplace nexus provisions vary greatly among the states, including who is subject to the law. Additionally, marketplace facilitator nexus allows states an opportunity to collect sales tax from sellers who may have total sales activity under $100,000, thus not individually qualifying under a remote seller provision, but sell through a platform that facilitates much more than $100,000 in sales. These laws benefit both the state and sellers by reducing administrative and compliance costs. Rather than enforcing remote sales tax collection laws against multitudes of individual sellers, states have placed the burden of collection on the marketplace facilitator. Many vendors use companies such as eBay or Amazon to facilitate online sales. A number of states originally adopted both a sales and transaction threshold, but have since removed the transaction requirement. No state has solely adopted a transaction threshold. States with sales-only thresholds are no lower than $100,000, but thresholds can be as high as $500,000 in states like California and Texas. However, safe harbor provisions vary greatly. In 2021, Kansas legislatively adopted a $100,000 threshold falling in line with every other state. Small-seller safe harbors have generally been based on sales amounts, transaction quantities or a requirement that thresholds are met or exceeded for both sales and transactions. Kansas was initially a noteworthy outlier, choosing to adopt a policy-based remote seller collection requirement without a threshold-based safe harbor. Some variation of Wayfair economic sales tax nexus has been adopted by every state in the two years following the decision. Florida and Missouri held out the longest, but both states enacted economic nexus legislation in 2021 with varying effective dates. The sales tax nexus landscape heading into 2022 and beyond However, questions remain, especially for growing businesses increasing multistate sales through ecommerce and fulfillment platforms. The shift in focus from physical to economic presence represents a seismic shift for nexus analysis, giving states broad authority to tax remote sellers.Īfter only three years, Wayfair has emerged from young adulthood to near maturity and universal adoption with the final two states passing economic nexus standards in 2021 legislative sessions. North Dakota in 1992, allowing states to impose sales and use tax collection and remittance obligations on remote sellers based solely upon their economic activity in a state. Wayfair decision overturned the long-standing ‘physical presence’ nexus standard for sales and use taxes established under Quill v. Supreme Court issued the most important state tax nexus decision in almost 30 years. ![]()
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