Effective November 1, 2018, New Jersey, North Carolina, South Carolina, and South Dakota joined the list of states requiring remote sellers meeting specified economic nexus thresholds to collect and remit applicable sales and use tax. As a reminder, the North Carolina Department of Revenue’s guidance requires all remote sellers with over $100,000 of gross sales sourced to North Carolina or 200 or more separate transactions sourced to North Carolina in the current or previous calendar year to collect and remit sales and use tax on sales into the state. The South Carolina Department of Revenue’s guidance provides that remote sellers (including marketplace facilitators) with gross revenue exceeding $100,000, from the sale of tangible personal property, products transferred electronically, and services delivered into South Carolina, in the previous or current calendar year, have economic nexus with South Carolina and have an obligation to collect and remit.
In South Dakota, Governor Dennis Daugaard and Attorney General Marty Jackley annouced that the Wayfair plaintiffs have all agreed, beginning January 1, 2019, to collect and remit sales and use tax on South Dakota sales. However, all other remote sellers not specifically named in the Wayfair litigation that meet the economic nexus standard are required to begin remitting sales tax to South Dakota effective November 1, 2018, under the terms of special legislation passed in September 2018.
On November 1, 2018, the New Jersey Division of Taxation posted guidance on its website for remote sellers. Effective November 1, 2018, remote sellers will be required to register, collect and remit sales tax if the remote seller has either (1) gross revenue from sales of taxable products or services exceeding $100,000, or (2) sold taxable products or services delivered in 200 or more separate transactions, during the current or prior calendar year. Those not meeting either of these criteria will not be required to register with the Division. Referencing Technical Bulletin 83 (see below), the guidance states that remote sellers are not required to collect and remit sales tax if sales are made through a marketplace facilitator. Sellers that exceed the economic nexus threshold but are making sales solely through a marketplace must register with the Division, but can request to be placed on a non-reporting basis for sales tax.
In addition to remote sellers being required to collect beginning November 1, 2018, New Jersey law also requires marketplace operators to begin collecting tax on sales into the state that they facilitate beginning that date. The Division of Taxation recently issued Technical Bulletin 83, which addresses the sales and use tax collection and remittance requirements for marketplace facilitators. A marketplace facilitator is defined as a person that owns, operates, or controls any physical or electronic marketplace and engages in certain of a wide range of activities, including, but not limited to, listing or advertising a seller’s products, providing fulfillment services, providing an electronic or physical infrastructure for making sales, and processing payments for the transaction. Effective November 1, 2018, marketplace facilitators must collect sales tax on sales of tangible personal property, specified digital products, and services delivered into New Jersey that were made by a seller using the marketplace, even if the marketplace seller is registered in New Jersey for sales tax purposes. A marketplace facilitator is required to register and collect regardless of whether it meets the economic nexus thresholds set forth for remote sellers. The Technical Bulletin makes clear that marketplace sellers are not required to collect and remit sales tax on taxable products and services delivered into New Jersey if a marketplace facilitator is required to collect and remit sales tax on the transaction. However, marketplace facilitators and marketplace sellers may enter an agreement regarding which party is responsible for the collection and remittance of sales tax.
The law setting forth the marketplace collection requirement authorizes the Division to grant marketplace facilitators, upon written application and for good cause shown, a delay in their collection and reporting obligations for a period of less than 180 days. The request must explain the reasons a delay is necessary and set forth the date on which the marketplace will be in a position to collect. The Technical Bulletin also sets forth that marketplace facilitators will be subject to audit for all retail sales made on their platform. Marketplace sellers will not be audited for the same retail sales for which the marketplace facilitator is audited unless the marketplace facilitator is granted relief from liability because it was provided inaccurate information necessary to collect the appropriate amount of tax by the seller.
On November 1, 2018, the Wyoming Department of Revenue announced that the state had settled its Wayfair-related litigation with the taxpayers involved. Based on guidance released by the Department on October 29, remote sellers will be required to collect and remit Wyoming sales tax (assuming they meet the state’s economic nexus threshold) effective February 1, 2019. The threshold provides that sellers with over $100,000 of gross revenue from Wyoming sales or 200 or more separate transactions for delivery into Wyoming are required to collect and remit even though they have no physical presence in the state. For purposes of the revenue threshold, gross sales includes taxable, exempt, and wholesale sales. Further, for purposes of the transaction standard, the guidance provides that each invoice is a transaction. However, a yearly subscription paid through installments is considered a single transaction. Please stay tuned to TWIST for future Wayfair-related updates.