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What’s Happening with Sales Tax in July?

by Jennifer Clark

July is a busy month for activity around sales tax. It’s been a little over a year since the landmark Wayfair decision that defined economic nexus and complicated matters for many online sellers. In this last year we’ve seen states feverishly pass legislation that sets forth economic nexus thresholds based on total sales and transactions during a 12-month period.

With that sudden passage of new laws, there’s been a recent uptick in states changing their minds and removing transactional thresholds as well as increasing the revenue amount necessary to trigger nexus. Further, more and more states are passing marketplace facilitator laws that allow popular eCommerce platforms like Amazon or Walmart to collect sales tax on behalf of the seller. 

Below we outline a few of the biggest changes around sales tax that came into effect in July. 

Economic Nexus

The following states passed new economic nexus laws in July. 

Arkansas

Threshold: $100,000/year in gross revenue or 200 or more separate transactions on the previous calendar year’s sales

Effective date: July 1, 2019

Connecticut 

Connecticut lowered their economic threshold from $200k to $100k, which can create nexus sooner for many retailers. There is still the 200 or more transactions requirement that has to be met in addition to the sales in order to trigger nexus. 

New Mexico

Threshold: $100,000 in annual gross revenue from sales in New Mexico in the last calendar year.

Effective date: July 1, 2019

New York

While New York already had economic nexus legislation in place, they passed new legislation in July that updated their thresholds and set retroactive updates as well. The increase from the prior threshold of $300,000 for businesses that have no physical presence in New York is effective retroactively to June 21, 2018.

Threshold: $500,000 per year in gross revenue AND sales made into New York in more than 100 separate transactions in the last four quarters.

Effective date: July 21, 2018

Pennsylvania

Important note: Prior to January 2019, Pennsylvania’s law was a “notice & report law” which was not affected by the South Dakota v. Wayfair case. 

Threshold: Sales into Pennsylvania that exceeded $100,000 in the previous 12-month period are considered to have economic nexus. The notice and report is still in effect for those with  taxable sales greater than $10,000 but less than $100,000 in a calendar year.

Effective date: July 1, 2019 for economic nexus threshold

Rhode Island

Important Note: Prior to July 1, 2019, Rhode Island enacted a “notice & report law” for non-collecting sellers which was not affected by the South Dakota v. Wayfair case. 

Threshold: Sales in Rhode Island that exceed $100,000 or more, or 200 separate transactions in the state in a calendar year trigger economic nexus.

Effective date: July 1, 2019 for economic nexus threshold

Virginia

Threshold: Sales of $100,000 or more in Virginia, or at least 200 individual sales transactions into the state if in the previous or current calendar year.

Effective date: July 1, 2019

Washington 

Similar to Pennsylvania, Washington once had Notice and Report legislation. But in July 2019, SSB Bill 5581 removed the 200 transaction threshold as well as the Notice and Report. 

Threshold: Sales of $100,000 or more into the state into Washington in the current or last calendar year..

Effective date: October 1, 2018

Marketplace Facilitator Laws

It’s becoming more common to see popular marketplaces collect on sellers’ behalf in several states thanks to new marketplace facilitator laws. July is a busy time for marketplaces, as there were several new states and marketplaces who now collect sales tax for sellers. Below is a list of the states and marketplaces that enacted laws in July. Note: if the state law was passed prior to July 2019, then we just listed the marketplaces that began collecting as of July. 

Arkansas: Amazon, ebay, Etsy, Walmart (all effectively collecting as of July 1, 2019).

Indiana: Amazon, ebay, Etsy, Walmart (all effectively collecting as of July 1, 2019).

Kentucky: Amazon, ebay, Etsy, Walmart (all effectively collecting as of July 1, 2019).

New Mexico: passed marketplace facilitator legislation July 1 and all four platforms began collecting July 1 as well.

North Dakota: passed marketplace facilitator legislation July 1; however marketplace facilitators do not have to collect or remit tax on sales made before October 1, 2019. Walmart  began collecting July 1. 

Oklahoma: eBay began collecting July 2019, the other platforms were previously collecting.

Pennsylvania: eBay began collecting July 2019, the other platforms were previously collecting.

Rhode Island: passed marketplace facilitator legislation July 1 and all four platforms began collecting July 1 as well.

South Carolina: eBay will begin collecting October 1, but the other three popular platforms already collect sales tax. 

South Dakota: eBay began collecting July 1, but the other three popular platforms already collect sales tax. 

Vermont: Passed marketplace facilitator legislation June 4, 2019, but eBay, Etsy, and Walmart all went into effect July 1. 

Virginia: passed legislation July 1 and all four platforms went into effect July 1.

West Virginia: passed legislation July 1 and all four platforms went into effect July 1.

Wyoming: passed legislation July 1 and all four platforms went into effect July 1.

To stay up-to-date with all of these laws, bookmark TaxJar’s state economic nexus blog and our state-by-state marketplace facilitator blog. We regularly update these posts with the latest passed legislation and make the bills available as well as other resources that can help you understand where you might be required to remit sales tax. 

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