Free resource to help you determine how and if you have sales tax nexus and how to set yourself to manage sales tax nexus.
Like the rest of the country, the Southeast region of the U.S. is not immune to the changes created by the South Dakota v. Wayfair decision. In fact, 2020 presented a slew of changes in the southeast that have big implications for remote sellers making sales into the region.
New legislation, threshold changes, and opportunities to collect special rates are all things you need to be aware of when it comes to monitoring your company’s economic nexus obligations. You need to know when your processes, software, and licensing need to adjust!
Let’s dig into five notable recent remote seller updates in the southeastern region so you can understand how these changes may affect your business operations.
Only two states have yet to implement any kind of post-Wayfair economic nexus legislation: Florida and Missouri. The Florida legislature has introduced many bills since the Wayfair decision came down in 2018, but none have prevailed.
S.B. 50 is the latest effort to require remote or out-of-state sellers and marketplace facilitators to collect sales tax on their Florida sales. The bill would require remote sellers and marketplace facilitators to collect tax if they exceed an economic nexus threshold of $100,000 in sales into the state during the 2020 calendar year. If enacted, S.B. 50 would become effective July 1, 2021.
Currently, the bill is in the Senate Finance and Tax Committee. Following the tough state revenue year of 2020, legislators have all the more reason to finally pass an economic nexus law! It’s only a matter of time before Florida passes legislation. Remote sellers and marketplace facilitators need to be prepared with sales volume tracking mechanisms in place for Florida sales in order to register in a timely manner as needed.
The Sales Tax Institute will be tracking S.B. 50 closely to keep you updated!
A 2017 Louisiana act established a Sales and Use Tax Commission for Remote Sellers (the Commission) housed within the Department of Revenue. The Commission was tasked with establishing a uniform Louisiana state and local sales and use tax base and serve as a single point for sellers to collect and remit state and local taxes on their sales into the state.
Given the complexity of local taxes in Louisiana’s home rule parishes, the establishment of this single state-level collecting entity is definitely welcomed! Remote sellers are not required to register with each parish but will be required to collect the actual tax for each parish based on the delivery address.
After years of meetings and the enforcement date for Louisiana’s 2018 remote seller legislation being thrown into question several times, the Commission released a bulletin in 2020 announcing the date remote sellers must start collecting as July 1, 2020. Remote sellers that exceeded the state’s $100,000 or 200 transactions threshold as of that date were required to submit an application to the Commission for approval to collect tax by July 31, 2020.
Going forward, within 30 days of exceeding the economic nexus threshold, remote sellers are required to submit an application to the commission and must begin collecting state and local sales and use tax based upon actual applicable bases and rates on sales for delivery into Louisiana within 60 days.
Louisiana also passed its marketplace nexus legislation in 2020 with a July 1, 2020 effective date and the same $100,000 or 200 transactions thresholds.
If you are a remote seller/marketplace facilitator who makes sales into Louisiana, we recommend checking out this series of helpful FAQS the Commission has provided to determine your obligations.
Alabama rolled out its post-Wayfair legislation on a similar timeline to a large handful of states with an October 1, 2018 effective date. What makes remote seller requirements unique in Alabama is the state’s Simplified Sellers Use Tax Program (the Program).
The Program allows eligible remote sellers to collect, report, and remit a flat 8% sellers use tax on all sales made into Alabama. To be eligible, a seller cannot have a physical presence in the state and must apply and be accepted into the Program prior to collecting and remitting. For those eligible, the Program eliminates the need to register with Alabama home rule authorities and a single rate is collected across the state regardless of the locality shipped to in Alabama (and covers both state administered and home rule localities).
Remote sellers who are newer registrants for Alabama sales tax should also note that Alabama has a new sales tax license renewal requirement. All sales and use tax licenses issued by the Alabama DOR must be renewed annually by December 31.
Many states follow the South Dakota model of economic nexus thresholds presented in the South Dakota v. Wayfair case: $100,000 or 200 or more separate transactions. Georgia is one of the states that adjusted its original economic nexus thresholds post-Wayfair decision to match the South Dakota model.
Georgia’s original economic nexus legislation formulated in 2017 and 2018 had a higher dollar amount sales threshold of $250,000 paired with a 200 transactions threshold. The state enacted legislation in 2019 that lowered this threshold to $100,000 but kept the 200 transactions threshold unchanged, effective January 1, 2020.
This change in Georgia highlights just how nimble sellers need to be in monitoring their out-of-state sales tax obligations. Remote sellers with sales hovering just below the $250,000 threshold (and not exceeding the 200-transaction threshold) suddenly found themselves on the hook to register and collect tax when the threshold dropped to $100,000.
2020 was a big year for remote seller requirements in Tennessee. The governor signed marketplace nexus legislation in April and legislation that lowered the economic nexus threshold in June, both changes are effective October 1, 2020.
Marketplace facilitators making or facilitating sales of more than $100,000 during the previous 12-month period are required to collect and remit Tennessee sales and use tax. In applying the threshold, marketplace facilitators should include all retail sales, including exempt retail sales, but should exclude sales for resale.
Tennessee became another southeastern state that lowered its economic nexus threshold with legislation that lowered the threshold from $500,000 to $100,000. This also applies to the newly passed marketplace nexus legislation, dropping the threshold to $100,000 for marketplace facilitators.
The heat may slow many things down in the South, but sales tax changes are not one of them. Sales tax rules and legislation are constantly changing at the state level across the region. It can feel nearly impossible to keep up with every important law change or court ruling that is taking place.