Stay up to date with sales tax: Join our mailing list!


Amazon.com has entered into a voluntary sales tax collection agreement with the state of Arkansas. Amazon will begin collecting Arkansas sales tax on its sales to Arkansas consumers and businesses beginning March 1, 2017. Arkansas currently has two proposed bills pertaining to remote sellers pending approval. S.B. 140 is an economic nexus bill that would require out-of-state sellers making more than $100,000 in sales or 200 or more transactions in Arkansas to register and collect the state sales tax. H.B. 1388 would enforce use tax notice and reporting requirements on out-of-state sellers. These bills are pending in the state legislature. We’ll update as action occurs. (Statement on Amazon's Decision to Collect Sales Tax in Arkansas Starting in March, Arkansas Governor Hutchinson, February 10, 2017)

(03/06/2017)

The Colorado Department of Revenue has released a general information letter stating that a marketplace provider’s payment of sales tax on sales by third-party retailers relieves the obligation of the third-party retailers to collect and remit sales tax (note that general information letters are general discussions of tax law and are not binding on the Department). In this instance, the marketplace provider represented that it is an agent of the third-party sellers for the purpose of selling their goods. The marketplace provider also represented that, if it collects and remits sales tax on sales subject to tax in Colorado, it does so as a “jointly responsible” retailer. The Department determined that the payment of the correct amount of sales tax by one jointly responsible retailer discharges the payment obligation of the other jointly responsible retailer. However, this does not discharge or otherwise limit the Department’s authority to administer and collect taxes from either jointly responsible retailer if a deficiency occurs in the future. The Department further added that if the marketplace provider exercises reasonable diligence when accepting the exemption certificate or sales tax license, then both the marketplace provider and third-party seller are relieved of liability for collecting tax if the Department later determines that the exemption did not apply. (Colo. Gen. Info. Letter No. GIL-16-020 (Colo. Dep’t Revenue Oct. 4, 2016, released Dec. 7, 2016))

(02/14/2017)

Amazon.com has entered into a voluntary sales tax collection agreement with the state of Wyoming. Amazon will begin collecting Wyoming sales tax on its sales to Wyoming consumers and businesses beginning March 1, 2017. This does not necessarily mean that all sellers that sell on the Amazon platform will begin collecting taxes.  The Legislature is considering a remote seller’s bill which would apply to all internet sales. H.B. 19 was introduced December 8, 2016 and passed the House January 17, 2017.  This would impose an economic nexus standard and require sellers making more than $100,000 in sales or 200 or more separate transactions in Wyoming to register and collect the sales tax.  (News Release, Wyoming Governor Matt Mead, January 12, 2017)

(01/31/2017)

The Ohio Supreme Court has issued 3 decisions upholding commercial activity tax (CAT) assessments on out-of-state retailers with no physical presence in Ohio. In each case, the Ohio Board of Tax Appeals found the out-of-state online retailer to have more than $500,000 in gross receipts in Ohio sales over the periods at issue, therefore meeting the bright-line presence test for nexus with Ohio.

 

The retailers contested the CAT assessments, arguing that they lacked substantial nexus with Ohio. The retailers argued that their nexus in Ohio was not sufficiently substantial because they lacked physical presence in Ohio. On appeal to the Ohio Supreme Court, the Tax Commissioner argued that the Commerce Clause does not impose a physical-presence requirement and accordingly, the $500,000 sales receipts threshold set forth in the Ohio CAT statute satisfies the Commerce Clause requirement for substantial nexus.

 

The Court agreed with the Tax Commissioner’s argument, stating that its reading of the case law indicated that the physical-presence requirement recognized and preserved by the U.S. Supreme Court for purposes of use tax collection does not extend to business-privilege taxes such as the CAT. The Court determined that Quill v North Dakota’s holding that physical presence is a necessary condition for imposing the tax obligation does not apply to a business-privilege tax like the CAT, as long as the privilege tax is imposed with a quantitative standard that ensures that the taxpayer’s nexus with the state is substantial. The Court felt that the quantitative standard is the $500,000 sales-receipts threshold. The Court concluded that the statutory threshold of $500,000 of sales in-state constitutes a sufficient guarantee of the substantial nexus for purposes of the Commerce Clause. It is expected that these cases will be appealed to the U.S. Supreme Court.  Given the Ohio Supreme Court’s finding that the physical presence test determined in Quill does not apply to a business privilege tax, a decision if the cases were to be heard might not resolve the longstanding sales and use tax nexus question.  We will continue to monitor these cases and their relevance to sales and use tax collection responsibility.  (Crutchfield, Inc. v. Testa, No. 2016-Ohio-7760, Ohio Supreme Court, November 17, 2016; Newegg, Inc. v. Testa, No. 2016-Ohio-7762, Ohio Supreme Court, November 17, 2016; and Mason Companies, Inc. v. Testa, No. 2016-Ohio-7768, Ohio Supreme Court, November 17, 2016)

(12/20/2016)

Tennessee has enacted new economic nexus regulations that establishes sales tax registration and collection requirements for certain out-of-state sellers. The newly enacted rule provides that out-of-state sellers who engage in the regular or systematic solicitation of consumers in Tennessee through any means and make sales to Tennessee consumers exceeding $500,000 during the previous 12-month period have substantial nexus with Tennessee. Sellers meeting this requirement are required to register with the state by March 1, 2017 and affirmatively acknowledge that they will collect and remit sales and use tax to the state beginning July 1, 2017. Unless a later date is established by the department, affected sellers must report and remit tax on sales of tangible personal property and other taxable items delivered to Tennessee consumers, beginning July 1, 2017. Sellers who meet the $500,000 threshold after March 1, 2017 are required to register with the department and begin to collect and remit Tennessee sales and use tax by the first day of the third calendar month following the month in which the dealer met the threshold. In no case will affected sellers be required to collect and remit sales and use taxes to the department for periods before July 1, 2017. Unless otherwise exempt, persons purchasing tangible personal property or other taxable items from any seller that is registered with the department must pay Tennessee sales and use tax on the purchase. Unless otherwise exempt, persons who import tangible personal property or other taxable items into Tennessee and have not paid sales and use tax to the seller must report and pay use tax directly to the department. Tennessee joins Alabama and South Dakota in establishing economic nexus positions. (Rules 1320-05-01-.63 and 1320-05-01-.129, Tennessee Department of Revenue, effective January 1, 2017)

 

UPDATE: Tennessee has created a new online sales and use tax registration application for out-of-state sellers with no physical presence in Tennessee. Out-of-state sellers with no physical presence in Tennessee that have made sales exceeding $500,000 to Tennessee consumers during the previous 12-month period are required to register by March 1, 2017. By registering, sellers acknowledge that they will collect and remit sales and use taxes to the Department beginning July 1, 2017. Out-of-state sellers with no physical presence in Tennessee that meet the $500,000 threshold after March 1, 2017 are required to register and begin to collect and remit sales and use taxes beginning the first day of the third month following the month in which the dealer met the threshold, but no earlier than July 1, 2017. Out-of-state sellers that have a physical presence in Tennessee are required to register even if their sales to Tennessee consumers are less than $500,000 during a twelve-month period. These sellers are required to register through the Department’s standard registration page. All three types of out-of-state sellers can register online at the Tennessee Department of Revenue website. (Hot Topics, Tennessee Department of Revenue, January 13, 2017)

 

UPDATE: On April 10, 2017, a Tennessee judge granted a request to bar enforcement of the state’s economic nexus legislation until final judgement has been granted on a legal challenge to the Administrative Rule from the American Catalog Mailers Association and NetChoice. Until then, the economic nexus legislation will not be enforced by Tennessee.  

(04/17/2017)

Pages

Scroll to Top