New Economic Nexus Laws Apply to ALL Retailers, Wholesalers, Distributors, and Manufacturers
Economic nexus in the sales tax world has been a hot topic since the Supreme Court decision in the summer of 2018. States have issued new regulations, laws, and informational bulletins regarding the changing landscape of the impacts of economic nexus. At this point in time (June 12, 2020), there are 44 states that have some kind of economic nexus for sellers or marketplace facilitators with various thresholds for volume of sales and transactions as well as various dates of enactment (see dates in parenthesis).
Economic sales/use tax nexus is created if you have*:
Over $100,000 in Gross Sales or 200 or More Separate Transactions
Over $100,000 in Gross Sales
AL (10/1/18) – over $250,000 in retail (taxable) sales; wholesale sales do not count towards threshold.
AR (7/1/19) – taxable sales that meet the minimum threshold in previous year - $100,000 in taxable sales or 200 or more transactions per year
AZ (10/1/19) – over $200,000 in sales for 2019, $150,000 in sales for 2020, and $100,000 in sales for 2021 and forward
CA (4/1/19) – over $500,000 in sales
CO (6/1/19) – over $100,000 in retail sales (not wholesale)
CT (12/1/18) – over $100,000 in retail sales (not wholesale or non-taxable services) and 200 or more transactions
GA (1/1/19) – $100,000 in retail sales or 200 transactions in current calendar year or preceding calendar year. Retail sales include exempt sales, but not wholesale sales.
KS (10/1/19) – economic nexus if a seller makes a taxable sale into the state – however, this policy, while enforced by the Dept of Revenue, is not supported by current law. Current law states that a seller has nexus if it has “any other contact” that would allow KS to require to remit tax under the US Constitution.
KY (10/1/18) – threshold of $100,000 in sales of tangible personal property or digital property or 200 or more transactions – does not apply to service sales
MA (10/1/17) – over $100,000 in total sales (non-taxable services are not included in threshold); most likely cannot be enforced before 6/21/18
MN (10/1/18) – 200 or more retail sales or $100,000 or more in total sales in the current or previous calendar year
MS (9/1/18) – over $250,000 in gross sales
NM (7/1/19) – over $100,000 in total taxable gross receipts from the previous calendar year (not including wholesale or exempt sales)
NY (1/15/19) – over $500,000 in sales of tangible personal property and 100 or more separate transactions in the preceding four quarters (changed from $300,000 in sales and 100 transactions as originally issued - $500,000 and 100 transactions threshold is effective retroactive to June 21, 2018)
OK (7/1/18) – $100,000 in retail (taxable) sales in the previous 12 month period; if you do not exceed the $100,000 in sales, you are required to give customers notice that they may owe use tax and begin filing an annual report of all sales into the state.
PA (7/1/19) – $100,000 in total sales; if under $100,000 but over $10,000 or more of taxable sales in previous 12 months, must either (1) collect tax or (2) provide notice to buyers and report to the state. other threshold and use tax reporting requirements still apply if under $100,000 in sales
RI (7/1/19) – gross revenue of $100,000 from the sale of tangible personal property, prewritten computer software, or taxable services or more or made 200 or more of these transactions in the state during the previous calendar year
TN (10/1/19) – over $500,000 in sales (threshold does not include wholesale sales or non-taxable service providers only)
TX (10/1/19) – over $500,000 in sales in preceding 12 months
VA (7/1/19) – over $100,000 of gross retail sales (does not include wholesale, or non-taxable services) or 200 or more separate transactions
WA (10/1/18) – over $100,000 in gross sales (gross sales includes wholesale, exempt, and retail sales)
*This is assuming that a company has no other nexus with the state.
** Enforcement date for LA is no later than 7/1/2020
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