Source: https://www.avalara.com/us/en/blog/2017/05/what-economic-nexus-means-for-your-remote-sales.html
Timestamp: 2019-04-24 17:57:28+00:00

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Update 7.19.2018: On June 21, 2018, the U.S. Supreme Court ruled in South Dakota v. Wayfair, Inc. that states can tax out-of-state businesses based on their economic activity in the state — physical presence in a state is no longer the only prerequisite for tax collection. In the wake of the decision, other states are adopting new or enforcing existing economic nexus laws. This post has been updated to reflect the most current information available at this time.
With sales tax revenue dropping due to an increase in untaxed (but not exempt) internet and catalog sales, a growing number of states have created economic nexus laws. These are designed to tax sales by out-of-state sellers without a physical presence in the state.
In many states, economic nexus policies have also been created with an eye toward triggering a legal battle that would land on the steps of the Supreme Court of the United States and provide an opportunity for the court to abrogate its decision in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). The ruling in Quill upheld the physical presence precedent: that a state cannot impose a tax obligation on a business unless that business has a substantial connection to the state, i.e., a physical presence. Update, 7.19.2018: Quill's physical presence rule was overruled on June 21, 2018.
Understanding where economic nexus exists and how policies differ from one state to the next is essential for any business that makes sales in multiple states.
This list has been updated to reflect states with South Dakota-style economic nexus provisions as of July 19, 2018.
Enforced as of October 1, 2018.
When the policy was first adopted, Governor Robert Bentley dared retailers to sue the state. Alabama was the first state to issue that challenge to remote retailers. That challenge was eventually answered by a large online retailer, and the case (Newegg Inc. v. Alabama Department of Revenue, No. s. 16-613) is still making its way through the courts.
In a less contentious move, Alabama created the Simplified Sellers Use Tax policy to make compliance easier for remote retailers. It “allows eligible sellers to participate in a program to collect, report and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama,” without worrying about the various combined state and local rates.
Enforced as of December 1, 2018.
Has 200 or more retail sales from outside Connecticut to destinations within the state during the 12-month period ending September 30, 2018.
Enforced as of January 1, 2019.
Conducts 200 or more separate retail sales of tangible personal property delivered electronically or physically to a location in Georgia for consumption, use, or storage in the state.
Enforced as of July 1, 2018.
Has entered into 200 or more separate transactions involving tangible personal property delivered in the State, services used or consumed in the State, or intangible property used in the State.
Has 200 or more separate sales transactions of tangible personal property or services to purchasers in Illinois.
Under an injunction until further notice.
The vendor makes more than 200 separate sales transactions in the state.
Like Alabama, Indiana created a law it hopes will be challenged. This would create an opportunity for the Supreme Court to overturn its decision in Quill. Update, 7.19.2018: Indiana's law was challenged and remains under an injunction pending legal proceedings. At this time, it's unclear how the decision in South Dakota v. Wayfair, Inc. will impact the law.
Makes Iowa sales in 200 or more separate transactions.
SF 2417 is a sweeping measure that expands nexus in a variety of ways. Additional information is available here.
Sells tangible personal property or digital property that was delivered or transferred electronically to a purchaser in Kentucky in 200 or more separate transactions.
The Kentucky Department of Revenue issued a statement shortly after the Supreme Court issued its decision in South Dakota v. Wayfair, Inc. It said its legislation was in conjunction with the Supreme Court decision and that Kentucky would "move forward with implementation of these provisions for remote sellers with sales into the state."
Made 200 or more separate transactions of taxable goods or services delivered into Louisiana.
The provision was set to apply “to all taxable periods beginning on or after the date of the final ruling by the United States Supreme Court in South Dakota v. Wayfair Inc., Overstock.com, Inc., and Newegg Inc.” That occurred on June 21, 2018. However, the Louisiana Department of Revenue has yet to announce when it will take effect.
The stated effective date is October 1, 2017. The state has not amended the start date in response to the Wayfair decision.
The seller sold for delivery into Maine tangible personal property, electronically transferred products, or services that are taxable in Maine at least 200 separate sales transactions.
Makes ten or more retail sales totaling more than $100,000 from outside this state to destinations in this state during a period of 12 consecutive months.
The effective date of the provision is dependent on the enactment of a federal law authorizing states to tax remote sales, or the U.S. Supreme Court modifying its decision in Quill Corp. v. North Dakota. The Supreme Court overruled Quill’s physical presence rule on June 21, 2018, and the Minnesota Department of Revenue has promised to provide additional guidance soon.
The stated effected date is December 1, 2017. Actual enforcement date to be determined.
Purposefully or systematically exploit the Mississippi market.
The vendor makes at least 200 separate taxable sales transactions in North Dakota.
With the June 21, 2018, ruling in South Dakota v. Wayfair, Inc., the state has announced it will enforce economic nexus as of October 1, 2018.
The remote seller has 200 or more separate transactions of TPP, electronically delivered products, or services delivered into South Dakota.
Update, 7.19.2018: South Dakota's challenge to Quill, South Dakota v. Wayfair, Inc., was heard by the U.S. Supreme Court in April 2018. On June 21, 2018, the court ruled Quill's physical presence rule was "unsound and incorrect." The case has been remanded to state courts for further proceedings, and the law cannot be enforced at this time.
Additional informaiton is available here.
The remote seller makes sales that exceed $500,000 to consumers in the state during the previous 12-month period.
Update, 7.19.2018: The rule was challenged and is under an injunction until further notice. The state has yet to say how the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. will affect its law.
The vendor makes at least 200 individual sales transactions for delivery into Vermont.
Under Act No. 134, a vendor is considered to regularly and systematically, or seasonally, solicit sales in Vermont by: displaying advertisements in Vermont; distributing catalogs, periodicals, advertising flyers, or other advertising by means of print, radio, or television media; or using internet, mail, telephone, computer database, cable, or other communication systems for the purpose of affecting sales of TPP.
Vermont economic nexus will take effect “the later of July 1, 2017 or beginning on the first day of the first quarter after a controlling court decision or federal legislation abrogates the physical presence requirement of Quill v. North Dakota, 504 U.S. 298 (1992).” Read Vermont economic nexus law hinges on Supreme Court, Congress.
Update, 7.19.2018: After the U.S. Supreme Court ruled in favor of South Dakota on June 21, 2018, the Vermont Department of Taxation announced it would enforce its economic nexus law starting July 1, 2018.
Enforced as of July 1, 2017 (for retailing B&O tax only).
At least 25 percent of total yearly gross receipts sourced or attributed to Washington in 2017 or 2018.
Although the rule has yet to be written, it will be enforced starting October 1, 2018. Additional details are available here.
The seller sold TPP, admissions, or services delivered into Wyoming in at least 200 separate transactions.
The authors of the legislation expect remote vendors to fight its new economic nexus policy. And like many of the abovementioned states, Wyoming would relish the opportunity to argue for the repeal of Quill before the United States Supreme Court.
Update, 7.19.2018: Wyoming's law was challenged and is under an injunction pending legal action. The state has not yet said how the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc. will impact its law.
As of July 19, 2018, a number of other states are looking at adopting economic nexus. These include Maryland, Nebraska, and New Jersey, .
Many other states, including Massachusetts, Ohio, Pennsylvania, Rhode Island, and Washington, have adopted expanded nexus provisions that include economic thresholds, but differ in important ways from the economic nexus law adopted by South Dakota.
The vendor makes at least 100 taxable sales transactions for delivery into Massachusetts.
The above lists are organic: State sales and use tax policies are always subject to change. And it should be noted that economic nexus policies aren’t the only way states are striving to capture tax revenue from remote sellers. Many states have adopted affiliate and click-through nexus policies, whereby out-of-state sellers establish a substantial connection to the state through ties to in-state affiliates, or when links on an in-state business’s website generate a certain amount of business for a remote seller. States are also expanding their laws to tax online marketplace transactions.
Furthermore, some states have adopted or are considering use tax notification requirements for remote retailers, rather than affiliate, click-through, and economic nexus laws. Use tax notification and reporting requirements such as the one adopted by Colorado require non-collecting remote retailers to notify consumers of their obligation to remit use tax to the state if sales tax wasn’t collected at checkout. Some of these policies require vendors to annually report their sales to customers, and some take it a step further, requiring the vendor to provide the state department of revenue with a list of customers and the total amount of their purchases. In their own way, many of these policies are also designed to challenge Quill.
Businesses need to be vigilant in order to remain in compliance in all states where sales are made. Tax automation software such as Avalara AvaTax helps businesses of all sizes with sales and use tax compliance. Learn more.
Learn more about South Dakota v. Wayfair, Inc. and its potential impact on businesses.

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