In an article for Total Retail published on August 19, 2019, Peter Stathopoulos discusses California’s recent enactment of sales tax legislation aimed at remote sellers and marketplace facilitators following the U.S. Supreme Court’s decision in South Dakota v. Wayfair, which ruled that states can require businesses without a physical presence in the state to collect and remit sales tax from their transactions.
Following the Wayfair ruling, states hurried to pass legislation or adopt rules allowing them to use the new sales tax nexus threshold. However, many states have not yet weighed in on the matter, creating uncertainty for remote retailers. Recently, California adopted an economic nexus standard that requires remote sellers to collect and remit sales tax if they exceeded $500,000 in gross sales from products delivered in the state. Additionally, the new law established new sales tax collection responsibilities for marketplace facilitators, such as Amazon.com, by making them responsible for not only collecting taxes from their own sales in the state, but also the sales of third-party sellers using their marketplace.
Peter provides some key steps for retailers to follow and protect themselves in states that have adopted legislation in light of the Wayfair decision, such as: working with their tax providers to determine which states have adopted economic nexus standards for sales tax; communicating with their marketplace facilitators to determine the states in which the facilitator will be collecting sales tax on behalf of marketplace sellers; and, automating their sales tax compliance through a software or SaaS solution.
“The adoption of the higher nexus threshold by one of the largest markets in the country, and the lack of state uniformity so far, is evidence that the Wayfair decision may have opened a Pandora’s Box of issues for interstate commerce that have yet to be even discovered.”
To view the full article, please click here