State lawmakers continue to enact economic nexus legislation to take advantage of the authorization contained in the U.S. Supreme Court’s decision in South Dakota v. Wayfair. South Carolina, Georgia, and Tennessee are covered this week.
State lawmakers continue to enact economic nexus legislation to take advantage of the authorization contained in the U.S. Supreme Court’s decision in South Dakota v. Wayfair. In addition, a rapidly increasing number are imposing the tax collection obligation on what they are terming “marketplace facilitators” or “marketplace providers.” Below is a summary of the remote seller and marketplace collection legislation enacted last week.
South Carolina Governor Henry McMaster recently signed Senate Bill 214, which codifies the Department of Revenue’s position with regarding marketplace facilitators. Recall, in South Carolina Revenue Ruling #18-14, the Department announced that a remote seller and marketplace facilitator 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, was considered to have nexus with the state beginning November 1, 2018 and would be required to collect tax on goods and services sold or facilitated into South Carolina. Senate Bill 214 amends the definition of a “retailer” and “seller” to include a person “operating as a marketplace facilitator.” Recall also that in 2017, the South Carolina Department of Revenue issued an assessment against a major marketplace facilitator, contending that under South Carolina law prior to Wayfair that the marketplace was effectively making a consignment sale and was, therefore, responsible for collecting tax on sales it facilitated. Senate Bill 214 states in the preamble that it is not intended to affect the applicability of South Carolina law to any litigation or audit currently in process. Senate Bill 214 takes effect immediately upon the Governor’s signature (April 26, 2019).
In Georgia, House Bill 182, which addresses the obligations of remote sellers, was recently signed into law. Recall that in 2018, prior to Wayfair, Georgia enacted a bill requiring remote sellers with greater than $250,000 in revenue from retail sales or 200 or more separate retail sales in Georgia, to either collect sales tax or comply with notice and reporting requirements beginning January 1, 2019. The enactment of House Bill 182 reduces the nexus threshold to $100,000 in gross revenues from retail sales or 200 retail transactions to collect and remit sales tax on deliveries into Georgia, effective January 1, 2020. The bill also eliminates the existing collect or report provisions.
Late in the week, the Tennessee General Assembly approved House Bill 667 which, if approved by Gov. Bill Lee, will authorize the Department of Revenue to enforce an economic nexus rule it first issued over two years ago. Recall, in February 2017, the Department proposed Rule 129 requiring remote sellers with over $500,000 in sales into the state in the current or previous calendar year to collect tax on sales into the state. The proposed rule was challenged in court by certain direct marketers, and the legislature passed a law in 2017 preventing enforcement of the rule until subsequently approved by the legislature. The legal action was ultimately dismissed, and House Bill 667 allows enforcement of Rule 129 effective July 1, 2019. Please stay tuned to TWIST for future Wayfair related updates.