Reporting and notice requirements legislation isn’t a new trend in sales and use tax. In 2017 however, reporting requirements legislation suddenly became a big deal.
Since 2008, states have enacted a variety of new nexus provisions in order to require remote sellers to collect tax or provide information about in-state customers. These types of provisions are referred to as “Remote Seller Nexus”. This chart lists the states that have passed one or more of the following types of legislation, along with the effective date for that type of legislation:
Find the state you’re looking for and click on the effective dates for more details on the enacted legislation. Click on the state name to see all of the news items we’ve published on nexus for that state. See below the chart for quick overviews of each type of nexus.
Please note: This chart includes only legislation that has been enacted. It does not include proposed legislation.
|State||Click-Through Nexus||Affiliate Nexus||Reporting Requirements||Economic Nexus||Marketplace Nexus|
7/1/2017 – Challenged
10/1/2017 – Pending
1/1/2018 – Challenged
Click-Through Nexus: If a retailer or service provider contracts with an individual or company located in-state who directly or indirectly refers potential customers to the retailer through a web link for a commission/other consideration upon sale, the retailer is considered to maintain a place of business in that state. Thresholds apply and vary by state. Pay-per-click, banner and other advertising do not qualify if payment is not contingent upon a sale.
Affiliate Nexus: If an affiliated person of the retailer with a physical presence, or employees or agents in state, has sufficient nexus in state to require the retailer to collect and remit sales and use taxes on taxable retail sales of tangible personal property or services. Some states have expanded these provisions to include activities by unrelated parties performed on the seller’s behalf.
Economic Nexus: Generally correlates with a set level of sales or gross receipts activity within the state. No physical presence is required.
Marketplace Nexus: If an online marketplace operates its business in a state and provides e-commerce infrastructure as well as customer service, payment processing services and marketing, the marketplace facilitator is required to register and collect tax as the retailer rather than the individual sellers. This could also impose reporting requirements on the marketplace facilitator.
Reporting Requirements: Retailer must notify buyers that they must pay and report state use tax on their purchases. Retailer may be required to send purchasers an annual statement of all of their purchases from the retailer.
In an effort to help online sellers resolve prior sales tax liability, The Multistate Tax Commission (MTC) had negotiated a special program for online sellers that may have sales and income tax obligations from previous unpaid taxes in 25 different states. This special amnesty initiative program ran from August 17, 2017 to November 1, 2017. The program is now over. If you didn’t take advantage of the program but realize you need to evaluate your activities, you can contact us here.
Demystify sales tax nexus with the 5 Things to Understand About your Nexus Footprint white paper. It is free, printable, and will become a go-to guide for you and your frequently asked nexus questions.