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DMA Corporate Tax Blog

The tax world is an ever-changing environment, making it challenging to stay up-to-date. The tax experts at DMA post timely tax updates and information on state and local taxes across the United States and Canada.

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Wayfair Updates

by DMA Staff | Jun 25, 2020
November 2018 Wayfair Impact Update: The Latest State Economic Nexus Changes

South Dakota v. Wayfair was decided by the Supreme Court of the United States on June 21, 2018. This landmark case granted states and other taxing jurisdictions the authority to tax sales that meet an economic nexus threshold as if they met a physical presence nexus threshold. In the past two years, an economic nexus provision has been adopted by 43 of the 45 states that impose a sales tax. Florida and Missouri, despite multiple attempts at passing legislation, have yet to enact an economic nexus or marketplace facilitator law.

The initial threshold of $100,000 in gross sales or more than 200 separate transactions largely mirrored those cited in the South Dakota v. Wayfair case, although states have (among other changes) increased or decreased both the sales figure and/or transaction counts, altered the sales threshold to include exempt sales, and shifted implementation and/or enforcement dates. The time frames that these laws have gone into effect span the full range of the past two years, and many states altered their provisions as they addressed the issue of marketplace facilitators who facilitate the sales of many sellers on an online platform.

Since June 2018, 40 states have passed “marketplace facilitator” provisions, which compel a large retail site with multiple sellers who may not individually meet the threshold to both collect and remit sales tax on behalf of their marketplace sellers. The Wayfair decision has outsized impact on sales and use tax compliance, and as remote transactions continue to grow as a percentage of retail spending, the states that impose these economic nexus provisions will likely continue to alter their policies and approach to sales and use tax collection.

This article is part of DMA's Completely Compliance quarterly newsletter. Stay up to date with sales and use tax news, events, and information by signing up for the newsletter here.