More states are subjecting online sales to taxation.
As of Oct. 1, 2019, four U.S. states have gone live with economic nexus laws that require some remote sellers (i.e., any retailer without a physical presence in that state, such as e-commerce retailers) to charge sales tax. And 14 U.S. states have passed marketplace facilitator sales tax laws that impose state sales tax on at least some sellers who conduct business via third-party e-commerce platforms, such as Amazon Marketplace. Arizona and Texas have implemented both economic nexus and marketplace facilitator regulations.
Here is a brief overview of the four states which have passed new economic nexus laws:
• Arizona: Remote sellers with more than $200,000 in Arizona sales must comply with state and local taxes. The threshold will decrease to $100,000 by 2021.
• Texas: Texas has set a $500,000 in-state sales threshold and simplifies compliance with local tax rates.
• Tennessee: Tennessee has also adopted a $500,000 threshold, but requires compliance with any applicable city or county tax rates.
• Kansas: All remote sellers must collect applicable state sales tax with no threshold.
The following states have set marketplace facilitator tax regulations: Arizona ($100,000 threshold), California ($500,000 threshold), Colorado ($100,000 threshold), Maine ($100,000 threshold or 200 transactions), Massachusetts ($100,000 threshold), Maryland (no threshold), Minnesota ($100,000 threshold or 200 transactions), Nevada ($100,000 threshold or 200 transactions), North Dakota ($100,000 threshold or 200 transactions), Ohio ($100,000 threshold or 200 transactions), Oklahoma ($10,000 threshold), Texas (no threshold), Wisconsin ($100,000 threshold or 200 transactions).
“Specifically, sellers without physical presence will now be obligated to collect and remit tax in these sates, making compliance even more challenging for companies who have not invested in robust and comprehensive compliance solutions,” said Charles Maniace, VP of regulatory analysis at tax compliance software provider Sovos.