And, the beat goes on. State lawmakers continue to enact legislation in response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, and imposing the tax collection obligation on what they are terming “marketplace facilitators” or “marketplace providers” is the order of the day. Thirty-three states have enacted marketplace provisions, leaving only 12 sales tax imposing states remaining. Those states are: Florida, Georgia, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, North Carolina, Ohio, Tennessee, and Wisconsin. Legislatures in Massachusetts, Michigan, North Carolina, Ohio, and Wisconsin are currently considering marketplace legislation. Recently, Maine L.D. 1452 was signed into law adopting economic nexus provisions for marketplace facilitators. Effective October 1, 2019, a marketplace facilitator is required to collect and remit sales and use tax if, in the previous or current calendar year, it facilitates $100,000 in gross sales or has at least 200 or more separate transactions of sales of tangible personal property or taxable services.
In California, Senate Bill 92 addresses certain issues related to marketplaces. The bill revises the pre-existing provisions addressing newspapers, websites and other entities that advertise tangible personal property for sale. Under the revised law, “newspapers, internet websites, and other entities that advertise tangible personal property for sale, refer purchasers to the seller by telephone, internet link, or other similar means to complete the sale, and do not participate further in the sale are not facilitating a sale.” The bill also allows certain delivery network companies, as defined, to elect to be treated as marketplace facilitators. Finally, the bill limits liability for marketplace sellers who were engaged in business in California solely because they used a marketplace facilitator to make sales and the marketplace facilitator stored the seller’s inventory in California. These sellers will be relieved of penalties associated with their failure to collect and remit sales and use tax for sales made from April 1, 2016 to March 31, 2019 if they register, file completed returns for all applicable tax periods, and pay all taxes due or apply for an installment agreement within 90 days of the bill taking effect.
In Connecticut, the governor signed the state’s budget bill (House Bill 7424) which, among other things, revises the economic thresholds for remote sellers by lowering the dollar threshold for establishing economic nexus from $250,000 to $100,000 in gross receipts. The additional 200 separate transactions threshold remains the same. The bill also eliminates the requirement that a person must also “engage in the regular or systematic solicitation of sales of tangible personal property” to be considered a person required to collect and remit sales tax under the economic nexus provisions. These changes take effect on July 1, 2019.
Further, the Utah State Tax Commission has issued an updated sales and use tax bulletin summarizing the recently enacted marketplace provisions. The guidance provides that marketplace sellers are not required to register for a sales tax license for facilitated sales unless they otherwise have nexus in Utah. If the seller has nexus, it must file sales tax returns, but is not required to report sales made through a marketplace. Further, the guidance provides that purchasers incorrectly charged sales tax must seek a refund from the marketplace facilitator, rather than the seller. Please stay tuned to TWIST for additional Wayfair related updates.