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Sales & Use Taxes: Wayfair and October 1, 2019

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Many states are making changes on October 1, 2019 for sales & use tax purposes.  This effects all sellers of tangible personal property, digital goods or services across state lines.

The 2018 Supreme Court decision in South Dakota vs. Wayfair, Inc. changed the previous standard of only requiring sellers to register and collect sales & use taxes in jurisdictions in which the seller had a physical presence.

Wayfair changed the importance of economic nexus which means sellers now have to register and collect sales & use taxes in jurisdictions in which no physical presence exists but with sales or transaction thresholds exceeded.

Since 2018, 44 of the 46 states that administer sales & use taxes have adopted economic nexus rules.  

Here’s the states enforcing economic nexus standards on October 1st for sellers:

  • Arizona
  • Kansas
  • Maryland
  • Massachusetts
  • Minnesota
  • Tennessee
  • Texas

October 1st is also a big game changer date for marketplace facilitators.  What is a marketplace facilitator?  A marketplace facilitator is defined as a marketplace that contracts with third party sellers to promote their sale of tangible personal property, digital goods, and services through the marketplace.  Many states are requiring marketplace facilitators to register and collect sales & use taxes in lieu of the third party seller when economic nexus exists for the marketplace facilitator. 

Here’s the states enforcing economic nexus standards on October 1st for marketplace facilitators:

  • Arizona
  • California
  • Colorado
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nevada
  • North Dakota
  • Texas
  • Utah
  • Wisconsin

We aren’t done yet!  Several states have economic nexus standards enforcement dates later in 2019 and throughout 2020.  Let’s keep watch for those.

As for the last two hold outs, Florida and Missouri, state and local tax professionals believe it’s a matter of time before the last two states adopt economic nexus standards for sales & use tax purposes.  Will it be for sellers, marketplace facilitators or both?  Stay tuned.

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