Third Anniversary of Wayfair vs. South Dakota – All States are Now In
In June 2018 the US Supreme Court upturned the sales tax collection standard in its Wayfair vs. South Dakota decision. While the decision did not uphold South Dakota’s nexus statute based on the amount of sales and transactions, it revoked the prior ruling which required a physical presence to collect sales tax. The new requirement set by this decision is that the state must have a statute which requires sales tax collection based on a threshold that appeared to not create an undue burden on interstate commerce.
After the decision, most states quickly enacted the required statutes. These are referred to as Remote Seller thresholds. The last two hold outs were Florida and Missouri.
Remote sellers are businesses that do not have a physical presence in the state and reach a threshold in sales dollars or number of transactions. The most common threshold is $100,000 in sales or 200 transactions in a twelve – month period. A few states dropped or did not enact the 200 transactions threshold. Keep in mind that these thresholds only apply to businesses without a physical presence.
Recently, Florida enacted a Remote Seller threshold of $100,000 in sales shipped from outside the state to Florida. The $100,000 sales standard is based on the previous calendar year and only considers retail sales. Sales for resale are not included in the threshold. The collection requirement applies to retailers with over $100,000 in sales in 2020 and began July 1, 2021. There is a safe harbor for the first year if the seller registers with the Florida Department of Revenue by October 1, 2021. Retailers may register at: https://floridarevenue.com/taxes/eservices/Pages/registration.aspx
Missouri’s newly enacted Remote Seller threshold does not begin until 2023. The Remote Seller threshold is $100,000 in sales in the previous (2022) or current calendar year (2023). The threshold is based on taxable sales shipped to Missouri, therefore excluding sales for resale and other exempt sales. While the standard uses the current calendar year, the seller need only review its sales on a calendar quarter end and if meeting after the threshold has three months to register and collect tax. For example, if the first time the threshold of $100,000 sales is met in February 2023, the seller would not have to start collecting tax until July 1, 2023. (Three months after the quarter end of March is July 1st.)
Remember that New Hampshire, Oregon, Montana, Alaska, and Delaware (NOMAD) do not impose a state sales tax. However, many Alaskan local jurisdictions impose sales tax, and some have grouped together to impose these thresholds.
Please see our updated Economic Nexus Summary.