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BP Blast: Wayfair Update


It has been almost a year since the United States Supreme Court overturned the physical presence requirement for sales tax collection with its Wayfair v South Dakota decision (see page 6 in our most recent newsletter for background on the case). 

In that time, most states have adopted sales thresholds (often called “economic nexus”). If sales exceed these thresholds, a business may be required to collect and remit sales tax. This means that you may need to register for sales tax collection in those states.

This is a significant change for both states and businesses. Most states have adopted South Dakota’s threshold of either $100,000 of sales or 200 transactions in their state. While legal questions remain on the constitutionality of these requirements in states outside South Dakota, most states are currently enforcing these thresholds.

The map below shows states which currently have economic nexus thresholds (illustrated in red). Yellow states depict regions where thresholds will go into effect soon. California is the next state to go into effect with sales of $100,000 or 200 transactions creating a filing requirement on April 1, 2019.

If you currently make significant sales in states with economic nexus thresholds there are some additional questions to consider: Is my product/service subject to tax? Do any exemptions apply? What is my risk in comparison to the compliance burdens? How will I comply with new state filing requirements?

We can help you analyze whether your business has created nexus, potential risk, and options to consider. If you have questions on how this will impact your business, please reach out to Rachel Roberson, CPA, Tax Senior Manager at rroberson@bpcpa.com or 425.454.7990. We’re here to help!