As a result of the COVID-19 pandemic, many states have postponed legislative sessions due to health concerns and to abide by current social distancing recommendations from the Centers for Disease Control and Prevention (CDC).
However, despite these disruptions, lawmakers from several states are still prioritizing legislation related to South Dakota v. Wayfair, which established precedent for economic nexus. These states have been late to the table on such legislation or clarification.
After the Wayfair ruling, the Kansas Department of Revenue (DOR) stated all remote sellers, regardless of size, would be required to collect sales and use taxes starting October 1, 2019. However, as described by Avalara, the Kansas Attorney General determined the Kansas DOR does not have the authority to implement such requirements without providing safe harbor for small sellers. In response, the Kansas DOR disagreed, leaving remote sellers without clear guidance.
In an effort to provide additional direction and address the taxation of digital sales, Kansas lawmakers have introduced two bills.
HB 2537, introduced in January 2020, would require remote sellers to make $100,000 in gross receipts from sales for sales tax nexus to kick in, effectively providing safe harbor for small sellers and putting Kansas more in line with many other states.
Another bill introduced in January 2020, HB 2513, would require marketplace facilitators to collect and remit sales, use and transient guest taxes from sales made through their platforms. The bill would also remove click-through nexus provisions.
Louisiana’s economic nexus provisions will go into effect no later than July 1, 2020, but the state’s lawmakers have only recently moved to introduce marketplace facilitation legislation. The bill, S.B. 138, would require marketplace facilitators who either have $100,000 of in-state sales or 200 total in-state sales to collect and remit sales and use tax on behalf of marketplace sellers using the facilitator’s platform.
If passed, the law would become effective Jan. 1, 2021.
In September 2018, the Mississippi DOR issued guidance which required remote retailers to collect and remit sales and use tax, with a sales threshold of $250,000. A recent bill, H.B. 379, would require marketplace facilitators to do the same for third-party sales made through their platforms.
If passed, the law would become effective July 1, 2020.
As one of two states with a general sales tax that are currently without economic nexus legislation, Missouri is now making strides to change that. In December 2019, lawmakers prefiled SB 529, which if passed, would require remote sellers and marketplace facilitators who make $100,000 or more in sales to collect and remit sales and use taxes.
If passed, remote sellers would be required to remit sales and use taxes Oct. 1, 2020. The portion of the bill impacting marketplace facilitators would go into effect Jan. 1, 2022.
Florida joins Missouri as the second state with general sales tax but has yet to implement economic nexus. In August 2019, lawmakers filed SB 126, which would have implemented provisions to require remote retailers with more than $100,000 in retail sales, or 200 or more retail sales, to collect and remit sales tax. However, in March 2020, that bill died in appropriations.
At this time, there has been no other economic nexus legislation proposed.
We are keeping a close eye on the continuing economic impact of the COVID-19 pandemic and will be providing updates as the situation continues to evolve.
If you would like to know more about pending legislation regarding economic nexus or marketplace facilitators and how it could impact your business, please contact us today. We’re happy to clarify any multi-state tax issues you’re trying to navigate.
Otherwise, we wish you and your family continued good health.
