New 2019 Sales Tax Rules

Selling your product in another state? The rules are changing

Historically, the onus of paying sales tax has been on the buyer. But now with ecommerce being so prevalent in today’s world, a lot of states weren’t getting their cut of the e-business being done virtually. So states are passing new laws shifting the burden of collecting that sales tax from the consumer to the company, regardless if that company physically operates within that state. This is being done by calling the activity performed in the state “economic nexus.”

Why Economic Nexus?

Economic nexus may level the playing field for small businesses. Up until now, many internet-based retailers have been able to avoid charging state and local sales taxes that the local retailers in each state are required to collect and submit.

The argument, based on the decision in the South Dakota v. Wayfair, Inc. case decided by the Supreme Court, was that the physical presence requirement provided an unfair advantage to ecommerce businesses with significant sales but no physical presence in the state. This advantage was more pronounced as ecommerce retailers gained market share over recent decades.

Sales Tax

Does my company need to collect and remit sales tax under state economic nexus laws?

Economic nexus laws aren’t just for large internet retailers. Many states sales tax policies have a threshold of 200 transactions or $100,000 in sales in the current or previous calendar year. By early 2019, almost 30 states will require remote sellers to collect and remit sales tax. To date, these states include:

  • Alabama
  • Colorado
  • Connecticut
  • Georgia
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Mississippi
  • Nebraska
  • Nevada
  • New Jersey
  • North Carolina
  • North Dakota
  • South Carolina
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

If you think this affects you, call our tax experts today at 586-468-0200 so we can help.

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