U.S. States Continue to Embrace “Economic” Nexus
As expected, the United States Supreme Court decision in South Dakota v. Wayfair, which upheld a law requiring certain remote sellers of taxable goods and services to collect sales tax from their customers in South Dakota, is having a profound effect on the sales and use tax compliance requirements for remote sellers to many U.S. states.
Over thirty states now have in place, or have introduced, some type of economic nexus legislation to require remote sellers to register for and collect tax on sales made to customers within their jurisdictions. Most states have modelled their legislation after that used by South Dakota (which was effectively ratified by the Supreme Court), with remote seller thresholds generally ranging from US$100,000 in sales or 200 transactions in a preceding calendar year to in excess of US$500,000 in sales, regardless of the number of transactions. Effective dates for the new rules span from July 1, 2018 to January 1, 2019 (with a few states even asserting retroactive application). However, specific rules vary considerably by jurisdiction.
Check out this useful nexus development chart prepared by Ryan’s National Tax Team to help you understand how the Wayfair decision might impact your business. The chart summarizes current nexus provisions by state and the latest actions taken by each state to address remote sellers, including economic nexus thresholds, enforcement dates and legislative references.
For full coverage on this significant development in U.S. state sales and use tax, including the potential impact on Canadian organizations, check out the Ryan Canada website at: http://ryan.com/canada/wayfair/.
Need more information? Call the Ryan TaxDirectTM line at 1.800.667.1600 or visit: Ryan Canada TaxDirect.