Keep Eyes on These States for Sales Tax Nexus News
The headlines continue to feature new economic nexus announcements by states looking to collect sales tax from out-of-state sellers. Which states are most likely to pass new laws in the next few months? Our sales tax experts recommend keeping your eyes on these five states:
In February, House Bill 2702 was introduced which would require out-of-state sellers and marketplace facilitators to collect and remit Arizona sales tax. Interestingly, this bill was created by a group of Arizona retailers, lobbying groups and local governments called Arizonans for Main Street Fairness.
Colorado operates one of the most complicated sales tax systems in the country and with the enforcement of economic nexus requirements for remote sellers in 2018, the confusion and complaints are skyrocketing. Many legislators are trying to make collecting and remitting sales tax easier in Colorado by introducing Senate Bill 130 in February 2019 to simplify the sales tax collection process. If enacted the bill includes a laundry list of changes including requiring the Colorado Department of Revenue to provide more centralized sales tax compliance services to remote sellers instead of reporting to multiple jurisdictions. Also under consideration is House Bill 1240 which was introduced in March 2019. The bill would require marketplace facilitators to collect sales tax beginning if a $100,000 sales threshold is met.
Legislators in Idaho hope for quick passage of proposed legislation to legalize economic nexus and marketplace facilitator nexus requirements. The effective date for the two bills (H.B. 250 and H.B. 239) being considered would be June 1, 2019. If passed, remote sellers with $100,000 in sales to Idaho residents during the previous or current calendar year would need to collect and remit sales tax to the state. Marketplace Facilitators meeting the $100,000 threshold would be obligated to collect and remit sales tax for any retail sales facilitated by the marketplace provider.
In March 2019, the Kansas Governor vetoed Senate Bill 22 which would have established economic nexus requirements on remote sellers and marketplace facilitators. Consequently, House Bill 2352 has been put on the back burner...but for how long? This bill proposes economic nexus standards for remote sellers and marketplace facilitators who exceed $100,000 in Kansas sales during the current or previous calendar year. If passed, the effective date is currently set for July 1, 2019.
Legislators are debating whether or not to change the thresholds for economic nexus. Currently, the state requires remote sellers with annual sales of $500,000 or more to collect and remit sales tax to the state. This is the highest sales threshold in the country, recognized by only three of the states enforcing economic nexus. Tennessee also does not stipulate any transaction threshold. The proposed remote seller legislation (S.B. 0082 / H.B. 0733) seeks to reduce the sales threshold to $100,000, and add a transaction threshold of 200. If passed, the legislation would have an effective date of January 1, 2020.
Cherry Bekaert closely monitors all state activities regarding sales and use tax legislation. ClIck below for an up-to-date list of states with economic nexus requirements and marketplace facilitator laws.
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