OPERATIONS NOW
Navigating the Online Sales Tax Collection Process By Larry Weindruch, NSGA Director of Public Affairs
In the wake of the U.S. Supreme Court ruling in South Dakota v. Wayfair that eliminated the physical presence standard blocking states from requiring remote online sellers to collect sales tax, the question facing many sporting goods retailers and dealers who sell out of state on the Internet is “what’s next?” This ruling does not affect in-store transactions. The big question concerns members who sell on their websites to out-of-state customers and don’t yet collect sales tax. Not every state has a remote sales tax collection law on the books.
Bloomberg has compiled this listing of implementation dates and nexus thresholds of 26 states that have enacted economic nexus statutes: • Alabama (Oct. 1, 2018), $250,000 in-state sales • Connecticut (Dec. 1, 2018), 200 transactions and $250,000 in-state sales • Georgia (Jan. 1, 2019), 200 transactions and $250,000 in-state sales • Hawaii (July 1, 2018), 200 transactions or $100,000 in-state sales • Illinois (Oct. 1, 2018), 200 transactions or $100,000 in-state sales • Indiana (Oct. 1, 2018), 200 transactions or $100,000 in-state sales • Iowa (Jan. 1, 2019), 200 transactions or $100,000 in-state sales • Kentucky (Oct. 1, 2018), 200 transactions or $100,000 in-state sales • Louisiana (Jan. 1, 2019), 200 transactions or $100,000 in-state sales • Maine (Implementation date TBA), 200 transactions or $100,000 in-state sales • Massachusetts (Oct. 1, 2017), 100 transactions and $500,000 in-state sale • Michigan (Oct. 1, 2018), 200 transactions or $100,000 in-state sales • Minnesota (Oct. 1, 2018), 100 transactions or $100,000 in-state sales in at least 10 transactions • Mississippi (Dec. 1, 2017), $250,000 in-state sales • North Dakota (Oct. 1, 2018, or 60 days after a remote retailer meets the state’s threshold — whichever is later), 200 transactions or $100,000 in-state sales • Ohio (June 30, 2017), $500,000 in-state sales • Oklahoma (July 1, 2018), $10,000 in-state sales • Pennsylvania (April 1, 2018), $10,000 in-state sales • Rhode Island (Aug. 17, 2017), 200 transactions or $100,000 in-state sales • South Carolina (Nov. 1, 2018), $100,000 in-state sales • South Dakota (Nov. 1, 2018), 200 transactions or $100,000 in-state sales • Tennessee (currently on hold because of litigation), $500,000 in-state sales • Utah (Jan. 1, 2019), 200 transactions or $100,000 in-state sales • Vermont (July 1, 2018), 200 transactions or $100,000 in-state sales • Washington (Oct. 1, 2018), 200 transactions or $100,000 in-state sales • Wyoming (Oct. 1, 2018), 200 transactions or $100,000 in-state sales Five states (New Hampshire, Oregon, Montana, Alaska, Delaware) do not have state sales taxes and are not inclined to collect sales taxes for 45 states and the District of Columbia. They have said doing so would be an unfair burden on businesses in those states. Further complicating the matter is a bill introduced in the House of Representatives by Rep. Jim Sensenbrenner (R-WI). This bill, the Online Sales Simplicity and Small Business Relief Act of 2018 (H.R. 6814), would ban states from retroactively imposing sales tax collection duties on remote online sellers; require all states to push back economic nexus implementation dates to Jan. 1, 2019; and establish a small-seller exemption, meaning a remote seller with gross annual receipts below $10 million in the U.S. is not required to collect and remit sales tax. “For nearly a decade, NSGA has actively advocated for a federal legislative solution to the unfair advantage held by remote online sellers,” NSGA President & CEO Matt Carlson said. “We continue to advocate for the Remote Transactions Parity Act (H.R. 2193) in the House and Marketplace Fairness Act (S. 976) in the Senate, both of which would create a legislative standard that all states with a sales tax could follow. “We don’t feel that Rep. Sensenbrenner’s bill is the answer. States have not yet passed bills that include retroactive collection of sales taxes, and most have followed South Dakota’s Supreme Court-tested standard for economic nexus.” Another factor brought to NSGA’s attention puts focus on the team dealer business. There have been reports of schools that placed orders through their team dealer and received the orders drop-shipped directly from the manufacturer being charged sales tax despite the schools being tax exempt. NSGA is investigating the issue. NSGA NOW®
November/December 2018 | 5
