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Blogging Beyond the Numbers

South Dakota v. Wayfair Update
Posted by: Cam Brawley 2 weeks ago

Just a friendly reminder that effective April 1, 2019, California joins 37 other states who previously adopted economic nexus rules for sales & use tax purposes as a result of the South Dakota v. Wayfair decision.  This means out-of-state retailers selling above certain thresholds are required to collect California use taxes on their sales into California even if they have no physical presence in California. The collection requirement applies to out-of-state retailers if, during the preceding or current calendar year: (1) the retailer ‘s sales for delivery into California exceed $100,000; or (2) the retailer makes sales for delivery into California in 200 or more separate transactions.

Additionally, on April 1, 2019, Washington DC and Nebraska implement marketplace facilitator laws. 

Washington DC:

Marketplace facilitators must collect and remit sales tax on all sales the marketplace facilitator makes on its own behalf and all sales facilitated on behalf of marketplace sellers to customers in the District, regardless of whether the marketplace seller for whom sales are facilitated would have been required to collect sales tax had the sale not been facilitated by the marketplace facilitator. A “marketplace” means a physical or electronic place, including a store, a booth, an Internet website, a catalogue, or a dedicated sales software application, where a retail sale occurs. A “marketplace facilitator” means a person that provides a marketplace that lists, advertises, stores, or processes orders for retail sales subject to sales tax for sale by marketplace sellers, and directly or indirectly collects payment from a purchaser and remits payment to a marketplace seller, regardless of whether the marketplace facilitator receives compensation or other consideration in exchange for its services.  A “marketplace seller” is a person that makes retail sales through a marketplace operated by a marketplace facilitator.

Nebraska:

Nebraska sales tax collection will be required if, during the current or prior calendar year, a seller that does not have a physical presence or a multivendor marketplace platform either exceeds $100,000 in gross revenue from sales in Nebraska; or makes 200 or more separate transactions in Nebraska.

A multivendor marketplace platform is not required to collect and remit the correct amount of sales tax if an error was caused by incorrect information from the seller. This does not apply if the multivendor marketplace platform and seller are related parties.

Here’s where it gets really complicated.  Retailers that make Nebraska sales using a multivendor marketplace platform are not required to collect and remit sales taxes collected and remitted by the multivendor marketplace platform. These sales must be included in its gross receipts on its return. However, the retailer can claim a credit for sales taxes collected and remitted by the multivendor marketplace platform with respect to the retailer’s sales.

For additional help with understanding the effects of Wayfair on retailers and marketplace facilitators, contact Cam Brawley, CPA, Director of State and Local Tax Services.

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