Following last year’s Wayfair Supreme Court case, which set precedent for states to enact economic nexus provisions, legislatures across the country have defined and implemented new online sales tax laws.
Although many states quickly implemented economic nexus provisions and have already started collecting online sales tax, there are some that have decided to take a little bit of extra time.
Arkansas’ Online Sales Tax Legislation
Here are four states that recently passed online sales tax provisions. Keep reading for the details!
Quick Arkansas highlights:
- Passed? Yes
- Effective date? July 1, 2019
- Thresholds? 200 separate transactions or sales exceeding $100,000 of tangible personal property, taxable services, digital codes or specified digital products
With very similar to the wording in South Dakota’s SB 106 (the law that went before the U.S. Supreme Court in the Wayfair case), Arkansas’ online sales tax legislation establishes economic nexus on companies with at least 200 transactions or more than $100,000 in sales. Relevant purchases include tangible personal property, taxable services, digital codes or specified digital products.
Idaho’s Economic Nexus House Bill 239
Quick Idaho highlights:
- Passed? Yes
- Effective date? June 1, 2019
- Thresholds? $100,000 in gross receipts for both companies and marketplace facilitators
- Anything else? Retailer must collect and remit online sales tax for Idaho, but not any local sales taxes.
Idaho introduced House Bill 239 in March 2019; a month later it was enacted. This economic nexus legislation imposes online sales tax collection on any retailer that has more than $100,000 in gross receipts.
The measure also requires marketplace facilitators with more than $100,000 in combined sales to collect and remit online sales tax on behalf of sellers.
Virginia’s New Online Sales Tax Legislation
Quick Virginia highlights:
- Passed? Yes
- Effective date? July 1, 2019
- Thresholds? 200 separate transactions or sales exceeding $100,000 for both companies and marketplace facilitators
Senate Bill 1083 passed in Virginia’s legislature earlier this year, which means it goes into effect on July 1. The economic nexus provisions specify that companies must collect and remit online sales tax if they receive:
- More than $100,000 in gross revenue
- At least 200 sales transactions within the state
The same thresholds apply to marketplace facilitators as well.
New Mexico House Bill 6: Economic Nexus, Use Tax and More
Quick New Mexico highlights:
- Passed? Yes
- Effective date? July 1, 2019
- Thresholds? $100,000 in taxable gross receipts for companies and marketplace facilitators
- Anything else? The bill includes additional tax changes for organizations and individuals
Just signed by the state’s governor earlier this month, New Mexico’s House Bill 6 establishes economic nexus for retailers or marketplace facilitators with more than $100,000 in taxable gross receipts, no matter how many transactions are completed.
It’s also worth noting that this bill included more than online sales tax provisions for businesses. As CLA Connect explains, it also includes:
- Gross receipts tax sourcing rules will change from point of origin-based sourcing to destination-based sourcing for most categories of gross receipts as of July 1, 2021
- Revising compensating (use) tax to include a local option rate and to apply to services purchased outside of the state
- Personal income tax rate changes
- Corporate income tax rate changes
- Motor vehicle excise fee increase
What other states have online sales tax legislation pending? We’ll share two of them in next week’s post!
In the meantime, do you want to know more about online sales tax legislation and how it might affect your business? Contact us today! We’re happy to answer your questions about economic nexus or any other multi-state tax issues!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects. To learn more, contact us today at www.MilesConsultingGroup.com.
