Client Alerts Wayfair Update: Several States Expand Sales Tax Requirements as of October 1

Publication
10.05.18 | By: Thomas Vance

In June, the Supreme Court issued the historic decision of expanding the states’ ability to require businesses to collect sales tax. 

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For more information, see our article on the South Dakota v. Wayfair, Inc. decision here: “Supreme Court Wants YOU to Collect Sales Tax: What Every Business Should do in the Wake of Wayfair.”

In the wake of that decision, many states have changed their laws or rulings to require more businesses to register and file sales tax returns. A business can be required to collect sales tax even if it has no physical presence in a state, so long as it meets some minimum thresholds.

The Supreme Court approved the South Dakota law imposing filing requirements on businesses that have $100,000 of gross receipts or 200 transactions with customers in the state. Many states have adopted those thresholds, but others have altered them slightly.

Altogether, 30 states are set to have a threshold requirement for collecting sales tax. A total of 45 states and the District of Columbia have sales tax laws. Only five states do not impose a sales tax (Alaska, Delaware, Montana, New Hampshire and Oregon).

As of October 1, remote sellers now face collection and filing obligations in ten states as follows:

State Thresholds
Alabama $250,000 (no transaction threshold)
Illinois $100,000 or 200 transactions
Indiana $100,000 or 200 transactions
Kentucky $100,000 or 200 transactions
Maryland $100,000 or 200 transactions
Michigan $100,000 or 200 transactions
Minnesota $100,000 or 200 transactions
North Dakota $100,000 or 200 transactions
Washington $100,000 or 200 transactions ($10,000 notice requirement, 1/1/18)
Wisconsin $100,000 or 200 transactions

As of November 1, the following state requirements are effective:

State Thresholds
New Jersey $100,000 or 200 transactions
North Carolina $100,000 or 200 transactions
South Carolina $100,000 (no transaction threshold)
South Dakota* $100,000 or 200 transactions

*Delayed by court procedure

As of December 1, two more states add requirements:

State Thresholds
Colorado $100,000 or 200 transactions
Connecticut $250,000 and 200 transactions.

On January 1, five more states will join the others:

State Thresholds
Georgia $250,000 or 200 transactions
Iowa $100,000 or 200 transactions
Louisiana $100,000 or 200 transactions
Nebraska $100,000 or 200 transactions
Utah $100,000 or 200 transactions

The following states’ thresholds are already in effect:

State Thresholds Effective Date
Hawaii $100,000 or 200 transactions July 1, 2018
Maine $100,000 or 200 transactions July 1, 2018
Massachusetts $500,000 and 100 transactions October 1, 2017
Mississippi $250,000 (no transaction threshold) September 1, 2018
New York $300,000 and 100 transactions September 1, 1989
Ohio $500,000 (no transaction threshold) June 30, 2017
Oklahoma $10,000 (no transaction threshold) July 1, 2018
Pennsylvania $10,000(no transaction threshold) April 1, 2018
Rhode Island $100,000 or 200 transactions August 17, 2017
Vermont $100,000 or 200 transactions July 1, 2018

Other states are taking steps to enact similar thresholds, and your business should be prepared.

What you should do now

  1. Determine if your business crosses any of the above thresholds;
  2. If so, determine if you should have filed in prior periods or if you should register and file prospectively; and
  3. If you should have filed in prior periods, apply to the state’s voluntary disclosure program to reduce your exposure.

If you have questions regarding sales tax collection requirements or voluntary disclosure programs for your business, please contact us.

For more information, contact Tom Vance at tvance@orba.com or your ORBA advisor at 312.670.7444.

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