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 shown in table below:
| State | Threshold |
|---|---|
| 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, as shown in table below:
| State | Threshold |
|---|---|
| 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, as shown in table below:
| State | Threshold |
|---|---|
| Colorado | $100,000 or 200 transactions |
| Connecticut | $250,000 and 200 transactions. |
On January 1, five more states will join the others, as shown in table below:
| State | Threshold |
|---|---|
| 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, as shown in table below:
| State | Threshold | 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
- Determine if your business crosses any of the above thresholds;
- If so, determine if you should have filed in prior periods or if you should register and file prospectively; and
- 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 or your ORBA advisor at 312.670.7444.
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