Redpath Insights

states may enforce wayfair thresholds

States May Eye Nexus Enforcement to Stabilize Revenue

by Teri Grahn, CMI

June 16, 2020 - It has been about two years since the U.S. Supreme Court ruled on South Dakota vs. Wayfair. With the year 2020 featuring other, more challenging news for state coffers, states may start taking a harder look at economic activity that meets or exceeds economic nexus thresholds as defined by the 2018 ruling.

โ€œDue to States' recent decline in tax revenue, I believe Revenue Departments will be increasing their mailings of nexus questionnaires and their initiation of audits,โ€ said Teri Grahn, Redpath's sales and use tax service area leader.

To this point, there has been neither a significant amount of auditing of economic activities for nexusโ€”nor have there been sweeping initiatives to ensure that companies are compliant across the board.

However, with the strain of the pandemic this year increasing the likelihood that states will react with audits, it would be good to review the following chart.

State

Economic Thresholds

Determination - Time Period

Marketplace Nexus

Alabama

10/1/2018 - 250,000 retail sales

previous calendar year

1/1/2019

Alaska (Locals)

3/9/2020-$100,000 gross and 100 transactions

previous calendar year

NA

Arkansas

7/1/2019- $100,000 taxable sales or 200 transactions

in previous or current calendar year

7/1/2019

Arizona

10/1/2019 - $200,000 gross in 2019, $150,000 in 2020 & $100,000 after

in previous or current calendar year

10/1/2019

California

4/1/2019 - 500,000 gross sales

in previous or current calendar year

10/1/2019

Colorado

5/1/2019 - 100,000 retail sales

in previous or current calendar year

10/1/2019

Connecticut

7/1/2019 $100,000 gross sales AND 200 transactions (12/1/2018 - 250,000 retail sales AND 200)

preceeding 12 month period

12/1/2018

Distict of Columbia

1/1/2019 - 100,000 retail sales or 200 transactions

in previous or current calendar year

4/1/2019

Florida

NA

NA

NA

Georgia

1/1/2019 - $250,000 retail sales or 200 transactions (1/1/20 $100,000 or 200)

in previous or current calendar year

4/1/2020

Hawaii

7/1/2018-  $100,000 gross sales or 200 transactions

in previous or current calendar year

1/1/2020

Illinois

10/1/2018-  $100,000 retail sales or 200 transactions

preceding 12 month period

1/1/2020

Indiana

10/1/2018-  $100,000 gross sales or 200 transactions

in previous or current calendar year

7/1/2019

Idaho

6/1/2019 - $100,000 gross sales              

in previous or current calendar year

6/1/2019

Iowa

1/1/2019 -  $100,000 gross sales or 200, (7/1/2019 $100,000)

in previous or current calendar year

1/1/2019

Kansas

10/1/2019 - No thresholds

NA

NA

Kentucky

10/1/2018 -  $100,000 retail sales or 200 transactions

in previous or current calendar year

7/1/2019

Louisiana

7/1/2020 - $ 100,000 gross sales or 200 transactions-

in previous or current calendar year

NA

Maine

7/1/2018 -  $100,000 gross sales or 200 transactions

in previous or current calendar year

10/1/2019

Maryland

10/1/2018 -  $100,000 gross sales or 200 transactions

in previous or current calendar year

10/1/2019

Massachusetts

10/1/2017 -  $500,000 gross sales AND 100 transactions (10/1/19 $100,000)

previous calendar year

10/1/2019

Michigan

10/1/2018-  $100,000 gross sales or 200 transactions

in previous or current calendar year

1/1/2020

Minnesota

10/1/2018-  $100,000 retail sales or 100, (10/1/19 $100.000 or 200)

over a 12 month period

10/1/2018

Mississippi

9/1/2018-  $250,000 gross sales

preceeding 12 month period

NA

Missouri

NA

NA

NA

Nebraska

1/1/2019 -  $100,000 gross sales or 200 transactions

current calendar year

4/1/2019

Nevada

11/1/2018 -  $100,000 retail sales or 200 transactions

in previous or current calendar year

10/1/2019

New Jersey

11/1/2018 -  $100,000 retail sales or 200 transactions

in previous or current calendar year

11/1/2018

New Mexico

7/1/2019- $100,000 taxable sales

in previous or current calendar year

7/1/2019

New York

6/22/2018-  $ 500,000 gross AND 100 - (was 300,000 and 100)

in preceding 4 quarters

6/1/2019

North Carolina

11/1/2018-   $100,000 gross sales or 200 transactions

in previous or current calendar year

2/1/2020

North Dakota

10/1/2018 -  $100,000 taxable sales

in previous or current calendar year

10/1/2019

Ohio

1/1/2018 -  $500,000 gross, (8/1/2019 $100,000 or 200)

in previous or current calendar year

9/1/2019

Oklahoma

11/1/2019-  $100,000 taxable sales

in previous or current calendar year

4/10/2018

Pennsylvania

7/1/2019 - $100,000 gross sales

in the 12 previous months

7/1/2019

Rhode Island

7/1/2019 -  $100,000 gross sales or 200 transactions

in preceding calendar year

7/1/2019

South Carolina

11/1/2018 -  $100,000 gross sales

in previous or current calendar year

4/26/2019

South Dakota

11/1/2018 - $100,000 gross sales or 200 transactions

in previous or current calendar year

3/1/2019

Tennessee

 10/1/2019 -  $500,000 retail sales

preceeding 12 month period

10/1/2020

Texas

10/1/2019 -  $500,000 gross sales.

preceeding 12 month period

10/1/2019

Utah

1/1/2019 - $100,000 gross sales or 200 transactions

in previous or current calendar year

10/1/2019

Vermont

7/1/2018 - $ 100,000 gross sales or 200 transactions

over any 12 month period

6/1/2019

Virginia

7/1/2019 -  $100,000 retail sales or 200 transactions

in previous or current calendar year

7/1/2019

Washington

10/1/2018 -  $100.000 of retail sales or 200, (3/14/19 $100,000)

in previous or current calendar year

1/1/2018

West Virginia

1/1/2019 -  $100,000 gross sales or 200 transactions

previous calendar year

7/1/2019

Wisconsin

10/1/2018-  $100,000 gross sales or 200 transactions

in previous or current calendar year

1/1/2020

Wyoming

2/1/2019 -  $100,000 gross sales or 200 transactions 

in previous or current calendar year

7/1/2019

Important steps to take

  1. Analyze sales and transactions by state with threshold tests;
  2. Software system assessmentโ€”companies need a system to handle up to 10,000 state & local jurisdictions;
  3. Determination of the taxability of products, services, or customers;
  4. Identifying needed procedures to have in-place; from invoicing to exemption certificate management and beyond; and
  5. The registration and filing of returns.

It is important to work with an expert to go through everything you need to know for your specific situation including details about effective dates, thresholds, determination time periods, and past liability exposure for all of the different states that apply to you.

COVID-19 CARES Act

Teri Grahn, CMI

Teri Grahn, CMI

Teri Grahn, senior manager is the sales and use tax service area leader and is a certified member of the Institute for Professionals in Taxation. She educates and assists commercial entities with multi-state sales and use tax procedures and compliance, and works with clients to review internal records and practices and educates their staff on processes. She also helps clients navigate the unknowns of entering new states and jurisdictions by researching specific products and services, system and invoice set up to remain compliant with future transactions. Teri also supports clients through sales and use tax audits by investigating assessments and answering questions throughout the process. Teri works with clients in various industries including manufacturing and distribution, construction and real estate, and technology. Prior to joining Redpath and Company in 2003, Teri performed sales and use tax audits for the Minnesota Department of Revenue for 9 years.