News and Insights

Maryland Legislature Introduces “Main Street Fairness Act of 2017” in Bid to Expand Nexus Beyond Physical Presence

Tax Development Mar 16, 2017

Last month, the Maryland House of Representatives proposed House Bill 1213, otherwise known as the “Main Street Fairness Act of 2017,” in the latest move by individual states to capture online sales made by principally out-of-state businesses. In what is beginning to look like an emerging standard (see similar proposals in Arkansas, Indiana, and South Dakota, to name a few), the Main Street Fairness Act seeks to set a 200 transaction annual minimum before remote seller nexus is established.

What sets Maryland’s proposal apart from such legislation in other states is the surprisingly low threshold for annual gross receipts, which can also trigger nexus regardless of transaction frequency; while Arkansas and South Dakota propose to set their limits at $100,000, Maryland joins Nebraska in setting its threshold for nexus at $10,000 in gross receipts over the preceding four quarters. (At the federal level, the size of such a threshold and its impact on small business have been common points of disagreement in the ongoing debate over remote seller nexus.)

Whether this lower threshold is part of a growing trend remains to be seen, but smaller online retailers, which some consider the “mom and pop” stores of the digital age, would do well to keep an eye on these developments.