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- Remote Seller in U.S.: Economic Nexus
2023-11-20Remote Seller in U.S.: Economic Nexus
Physical presence (employee, warehouse, or inventory) was previously the only consideration where sales tax nexus is concerned. On June 21, 2018, the Supreme Court of the United States ruled in favor of the state in South Dakota v. Wayfair, Inc. The decision overruled a longstanding physical presence rule, allowing states to require remote sellers to collect and remit sales tax even if the sellers don’t have a physical presence in a state.
Since Wayfair, many states have adopted new rules defining what establishes a sales and use tax obligation, known as economic nexus.
Economic nexus is essentially sales tax nexus for online sales. Economic nexus is when a seller must collect sales tax in a state because they earn above a sales or revenue threshold in that specific state. This means that you don’t have to have physical presence in a state in order to collect and remit sales tax for that state.
Each state with economic nexus laws sets its own threshold that businesses must meet to have economic nexus. States’ thresholds for economic nexus vary. However, the most common economic nexus threshold is when a seller reaches $100,000 in sales or 200 transactions in a state annually.
The below chart provides you a summary of the economic nexus thresholds by states updated in June 2022. For more details, please consult with our consultants.
Note: Many states base their threshold on sales OR transactions, while some states base their threshold on sales AND transactions.
[Reference]:
https://www.salestaxinstitute.com/resources/economic-nexus-state-guide
https://www.taxjar.com/sales-tax/economic-nexus-laws
Since Wayfair, many states have adopted new rules defining what establishes a sales and use tax obligation, known as economic nexus.
Economic nexus is essentially sales tax nexus for online sales. Economic nexus is when a seller must collect sales tax in a state because they earn above a sales or revenue threshold in that specific state. This means that you don’t have to have physical presence in a state in order to collect and remit sales tax for that state.
Each state with economic nexus laws sets its own threshold that businesses must meet to have economic nexus. States’ thresholds for economic nexus vary. However, the most common economic nexus threshold is when a seller reaches $100,000 in sales or 200 transactions in a state annually.
The below chart provides you a summary of the economic nexus thresholds by states updated in June 2022. For more details, please consult with our consultants.
|
State |
Nexus Effective Date |
Remote Seller Threshold |
|
Alabama |
10/1/2018 |
Annual Alabama sales in excess of $250,000 based on the current or previous calendar year’s sales (excluding sales through a registered marketplace facilitator). |
|
Alaska |
01/06/2020 |
$100,000 sales to the state, or 200 sales transactions into the state in the current or previous calendar year. Note: Alaska Remote Seller Sales Tax Code was passed on January 6, 2020. However, from there local jurisdictions decide whether to adopt the code. |
|
Arizona |
10/1/2019 |
$100,000 in sales to the state in the current or previous calendar year (excluding sales through a marketplace). |
|
Arkansas |
07/1/2019 |
200 transactions or $100,000 in sales in the current or previous year (excluding sales through a registered marketplace). |
|
California |
4/1/2019 |
$500,000 in sales in the current or previous calendar year. |
|
Colorado |
12/1/2018 |
$100,000 in sales in the current or previous year. |
|
Connecticut |
12/1/2018 |
$100,000 in sales and 200 separate transactions within the 12-month period ending on September 30 immediately preceding the monthly or quarterly period when liability is established (excluding sales through an online marketplace) |
|
Delaware |
N/A |
N/A |
|
Florida |
7/1/2021 |
$100,000 in sales in the current or previous year. |
|
Georgia |
1/1/2019 |
$100,000 in sales or 200 separate sales in the current or previous calendar year. |
|
Hawaii |
7/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Idaho |
6/1/2019 |
$100,000 in sales in the current or previous calendar year. |
|
Illinois |
10/1/2018 |
$100,000 in sales or 200 separate transactions, quarterly review based on preceding 12-month period (excluding sales through a marketplace facilitator). |
|
Indiana |
10/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Iowa |
1/1/2019 |
$100,000 in sales in the current or previous calendar year. |
|
Kansas |
7/1/2021 |
$100,000 in sales in the current or previous calendar year. |
|
Kentucky |
10/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Louisiana |
7/1/2020 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Maine |
7/1/2018 |
$100,000 in sales in the current or previous calendar year. |
|
Maryland |
10/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Massachusetts |
10/1/2019 |
$100,000 in sales in the current or previous calendar year. |
|
Michigan |
10/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Minnesota |
10/1/2019 |
$100,000 in sales or 200 separate transactions in the previous 12-month period. |
|
Mississippi |
12/1/2017 |
$250,000 in sales in the previous 12-month period. |
|
Missouri |
1/1/2023 |
$100,000 in sales in the current or previous calendar year, determined quarterly. |
|
Montana |
N/A |
N/A |
|
Nebraska |
1/1/2019 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Nevada |
10/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous year. |
|
New Hampshire |
N/A |
N/A |
|
New Jersey |
11/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
New Mexico |
7/1/2019 |
$100,000 in sales in the previous calendar year. |
|
New York |
6/21/2018 |
$500,000 in sales and 100 separate transactions during preceding four sales tax quarters. |
|
North Carolina |
11/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
North Dakota |
10/1/2018 |
$100,000 in sales in the current or last calendar year (excluding sales through a marketplace). |
|
Ohio |
8/1/2019 |
$100,000 in sales or 200 transactions in the current or previous calendar year. |
|
Oklahoma |
11/1/2019 |
$100,000 in sales in the current or previous calendar year. |
|
Oregon |
N/A |
N/A |
|
Pennsylvania |
7/1/2019 |
$100,000 in sales in the current or previous calendar year. |
|
Puerto Rico |
1/1/2021 |
$100,000 in sales or 200 separate transactions in the seller’s accounting year. |
|
Rhode Island |
7/1/2019 |
$100,000 in sales or 200 separate transactions in previous calendar year. |
|
South Carolina |
11/1/2018 |
$100,000 in sales in the current or previous calendar year. |
|
South Dakota |
11/1/2018 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Tennessee |
10/1/2019 |
$100,000 in sales in the previous 12-month period. |
|
Texas |
10/1/2019 |
$500,000 in sales in the previous 12-month period. |
|
Utah |
1/1/2019 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Vermont |
7/1/2018 |
$100,000 in sales or 200 separate transactions during the previous 12-month period. |
|
Virginia |
7/1/2019 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Washington |
10/1/2018 |
$100,000 in sales in the current or previous year. |
|
Washington DC |
1/1/2019 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
West Virginia |
1/1/2019 |
$100,000 in sales or 200 separate transactions in the current or previous calendar year. |
|
Wisconsin |
10/1/2018 |
$100,000 in sales in the current or previous calendar year. |
|
Wyoming |
2/1/2019 |
$100,000 in sales or 200 separate transactions in the current or prior year. |
Note: Many states base their threshold on sales OR transactions, while some states base their threshold on sales AND transactions.
[Reference]:
https://www.salestaxinstitute.com/resources/economic-nexus-state-guide
https://www.taxjar.com/sales-tax/economic-nexus-laws
Disclaimer
All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.
WhatsApp/Line/Wechat: +852 5616 4140
All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.
WhatsApp/Line/Wechat: +852 5616 4140
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