Multistate: Recently-enacted and pending sales and use tax economic nexus bills

Illinois House Bill 3342, which adopts economic nexus standards for the Illinois Retailer’s Occupation Tax (ROT) and Service Occupation Tax (SOT) effective October 1, 2018, has been signed into law. Under House Bill 3342, a retailer is considered to be maintaining a place of business in Illinois if, for purpose of the ROT, the retailer’s gross receipts from purchasers in Illinois are $100,000 or more or the retailer has two hundred or more separate transactions from sales of tangible personal property. For purposes of the SOT, a serviceman is considered to be maintaining a place of business in Illinois if the serviceman’s gross receipts from purchasers in Illinois are $100,000 or more or the serviceman has two hundred or more separate transactions from sales of services. For both the ROT and SOT, the retailer or serviceman, respectively, must determine on a quarterly basis ending on the last day of March, June, September, and December for the preceding 12 month period whether either threshold was met. If either threshold is met, the retailer or serviceman is obligated to collect and remit Illinois tax for the succeeding 12 months. These provisions are effective beginning October 1, 2018.

Louisiana House Bill 17, which has been sent to Governor Edwards, would adopt economic nexus standards for Louisiana sales and use tax purposes by expanding the definition of a “dealer.” Under House Bill 17, the definition of a dealer is expanded to include any person having $100,000 or more in gross revenue or two hundred or more separate transactions from the sale of tangible personal property delivered into Louisiana, products transferred electronically in Louisiana, or services used or consumed in Louisiana. The bill also provides that the Louisiana Sales and Use Tax Commission for Remote Sellers, once established, will be the only entity authorized to collect local sales and use taxes from remote sellers pursuant to any federal law or U.S. Supreme Court decision authorizing states to require remote sellers to collect tax on sales into the state. The law changes will take effect upon signature by Governor Edwards and apply to taxable periods beginning on or after the date the United States Supreme Court holds in South Dakota v. Wayfair that South Dakota’s economic nexus statute is constitutional.

Connecticut Senate Bill 417, which likewise adopts economic nexus standards for Connecticut sales and use tax purposes, is also pending signature. Under Senate Bill 417, the definition of “retailer” is expanded to include a person who engages in regular and systematic solicitation by various means, including electronically, if such person has at least  $250,000 in gross receipts and has made two hundred or more retail sales from the sale of tangible personal property delivered into Connecticut during the 12 month period ended on the September 30th immediately preceding the monthly or quarterly period during which such person’s liability for tax is determined. A retailer meeting these requirements will be considered to be engaging in business in Connecticut for purposes of the sales and use tax laws. The law change will take effect on December 1, 2018. Senate Bill 417 would also impose various requirements on electronic marketplaces and referrers.

Hawaii Senate Bill 2514, adopting economic nexus standards for Hawaii General Excise Tax purposes, is also pending signature. Please stay tuned to TWIST for future legislative updates.