The 2024 Election’s Potential Impact on Tax Policy–Post-Election Version
With the election behind us, and Republican control in the White House, Senate, and House of Representatives ensured, the direction that anticipated...
December 7, 2017 — As many states are still feeling the sting of lost revenue due to the rapid growth of e-commerce, many are looking for alternative ways to recoup these losses. The definition of "nexus" (or “substantial physical presence”) needed for sales tax collection is changing, and the states have found new ways to make sales and use tax compliance even more confusing. Out of state companies that are selling into these states and do not have nexus need to consider their options and analyze their sales to determine if and how to comply.
Now that the Colorado sales and use tax reporting law was upheld in the court of appeals, many other states are passing similar laws with steep penalties for not complying. To summarize, states are requiring remote sellers to either collect/remit sales tax or comply with notice and reporting requirements. Each state has different definitions for remote sellers, different minimum annual gross receipts thresholds, variances in the reporting requirements, and penalties.
Effective July 1, 2017, retailers who are not collecting sales or use tax either need to collect and remit Colorado sales tax or comply with Colorado’s use tax notice and reporting requirements. A non-collecting retailer is defined as selling tangible personal property to Colorado purchasers and does not collect Colorado sales or use tax.
Who does this apply to?
Non-collecting retailers whose total Colorado gross sales are more than $100,000 in a calendar year need to:
Note: Annual Purchase Summaries do not need to be sent if the purchaser’s annual total is less than $500.
What are the penalties for not complying?
Effective January 1, 2018, remote sellers, referrers and marketplace facilitators who are not collecting and remitting sales tax in Washington either need to collect and remit sales tax or comply with Washington’s use tax notice and reporting requirements. A remote seller is a seller, other than a marketplace facilitator or referrer, who does not have a physical presence in Washington and makes retail sales to Washington consumers.
Who does this apply to?
Non-collecting remote sellers whose total Washington gross receipts from retail sales are more than $10,000 in the current or preceding calendar year need to:
Note: Washington has different reporting rules for Marketplace Facilitators and Referrers.
What are the penalties for not complying?
Pennsylvania. Effective 2/1/2018, $10,000 or more of Pennsylvania aggregate sales, notice and annual summaries must be given to purchasers and an annual report must be filed with the Department, with penalties starting at $20,000 or 20% of Pennsylvania sales.
Louisiana. Effective 7/1/2017, $50,000 Louisiana gross receipts, notice and annual summaries must be given to purchasers and an annual report must be filed with the Department.
Vermont. Effective 7/1/2017, notice must be provided to purchasers of more than $500 of sales, notice and annual summaries must be given to purchasers, and a penalty of $10 applies for each failure to send the notice.
States are moving fast to recoup lost sales and use tax revenue. It's critically important to evaluate your sales and use tax collection, remittance, and reporting policies and procedures to ensure compliance. While the picture is clear for companies operating within states that are passing new laws and regulations, out of state companies that are selling into these states and do not have nexus need to consider their options and analyze their sales to determine if they are at risk of non-compliance.
With the election behind us, and Republican control in the White House, Senate, and House of Representatives ensured, the direction that anticipated...
Editor's note: This piece was originally published in 2020 and has been updated to reference new changes in Illinois state law.
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