can states collect sales tax from you October 31, 2018

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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can states collect sales tax from you
October 31, 2018
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can states collect sales tax from you 
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    Most of you have one business location. Under what circumstances can a state other than the one you have your business office collect sales tax from you. Rcent change in law is affecting this issue and the dust hasn't settled yet. Here is our report to familiarize you with the issues. This will be important for monitoring centers and DYI companies that operate nationwide. Thanks you our associate attorney Jonathan Rogoff for researching this issue. Here is his report:
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    In South Dakota v. Wayfair, Inc., the Supreme Court has ruled in favor of South Dakota, granting the state authority to impose sales tax obligations on out-of-state transactions.
What does that mean for remote sellers and how will it impact their business? Here’s a look at how the court’s decision paves the way for a new world for sales tax.
If you sell into states where you’re not registered to collect and remit sales tax, economic nexus can change your tax obligations. Rather than require a physical presence in a state, economic nexus is based entirely on sales revenue, transaction volume, or a combination of both.
    Review your sales transactions carefully. To trigger economic nexus in South Dakota, a remote seller must have $100,000 in sales of tangible personal property, electronically transferred products, or services delivered into the state, or 200 separate transactions of the same delivered into South Dakota in the current or previous calendar year.
    The U.S. Supreme Court decision places requirements on the South Dakota Supreme Court that will clearly take weeks to complete. There will be no immediate collection enforcement.
South Dakota was the first to get permission from the court, but several other states with economic nexus rules will follow its lead. Each state has a different start date and sales/transaction requirements that trigger nexus. Expect to see more states jump on board.
    Economic nexus is sweeping the nation in the wake of South Dakota v. Wayfair, Inc., but it’s important to remember that states also have other ways of taxing remote sales: affiliate nexus (ties to in-state affiliates), click-through nexus, cookie nexus (placing software or apps on in-state devices), tax on marketplace sales (facilitator held liable), and non-collecting seller use tax reporting (non-collecting sellers must share consumer use tax information).
State By State Examples of the Varying Thresholds Already Enacted by Legislature:

   Threshold 1- $100,000 in Sales or 200 plus transactions: Hawaii, Illinois, Iowa, Kentucky, Louisiana, Maine, Michigan, Minnesota (100 plus transactions), Nebraska, New Jersey, North Carolina, North Dakota, South Dakota, Utah, Vermont, Washington, Wisconsin, and Wyoming

   Threshold 2- $250,000 in Sales: Alabama and Mississippi

   Threshold 3- $250,000 in Sales AND 200 plus retail sales: Connecticut

   Threshold 4- $250,000 in Sales OR 200 plus retail sales: Georgia

    Threshold 5- $500,000 in Sales: Tennessee
 

CHART EXAMPLE
Sales tax states
Economic nexus effective date
Economic nexus thresholds triggering a collection obligation 
($ and/or transaction volume)
Transaction included in economic nexus threshold test
Other forms of remote seller nexus, with effective date

Connecticut
12.1.2018
At least $250,000
and 200 or more retail sales and systematic solicitation of sales in the state via the internet or other means 
Retail sales of products* delivered into the state
Non-collecting seller use tax reporting for referrers: 7.1.2019
Tax on marketplace sales: 12.1.2018

Georgia
1.1.2019
More than $250,000 or
200 or more retail sales
Retail sales of products* delivered into the state electronically or physically
Tax on marketplace sales:1.1.2019

Jonathan Rogoff, Esq.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com