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Completely Compliance - Remote Seller Update

by DMA Staff | Mar 29, 2017
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In an effort to collect missing revenues, many states are introducing legislation with varying language regarding remote sellers. While the gross receipts thresholds or number of transactions may vary, many of these bills have a common theme which is to challenge or circumvent the restrictions of physical presence decreed by Quill v. North Dakota.

Some of the state’s remote seller bills are worded very similarly. For example, Arkansas (SB 140), Nebraska (LB 44), North Carolina (SB 81), North Dakota (SB 2298) and Wyoming (HB 19) all similarly state that gross receipts derived from target customers in their prospective state of $100,000 or more than 200 separate transactions into the state will cause nexus in the state and the same requirements regarding collection and remitting of tax will be applicable to remote sellers as that of a seller with physical presence. Nebraska’s bill is more detailed as it adds language regarding goods which are “electronically delivered” and also allows for a use tax notification stipulation. If the seller refuses to collect, they may notify the purchaser that use tax is due to the state. If no notification is sent, penalty will be assessed on the seller. Notifications must be sent by January 31 and includes all purchases, amounts and exemptions, if known. An annual statement must also be provided to the state by March 1 as well. Utah (SB 110) and New Mexico (HB 202) also established a $100,000 threshold; however, the 200 transactions are not noted. New Mexico’s bill will also change the definition of “place of business” to where tangible personal property is delivered. Note that Wyoming’s HB 19 was signed by the Governor and is effective July 1, 2017. New Mexico’s HB 202 has passed both the House and the Senate. All other bills are still in committee.

Some states have larger thresholds while others are much smaller. Georgia (HB 61) introduced a $250,000 threshold or 200 separate transactions and is similar to Nebraska as it will allow for use tax notification provisions. Mississippi (HB 480) also had a $250,000 threshold; however, the bill died in Committee at the end of February. Even greater was Tennessee (Rule 129(2)) with a $500,000 threshold. It was effective January 1, 2017. On the opposite side, other states will use a lower $10,000 gross receipts threshold, such as Idaho (HB 155), Maryland (SB 855), and South Carolina (SB 214).

Other states to note are Hawaii (SB 1301) which redefines the terms, “use”, “seller” and “representation” which will include “through online or internet sales” and is introducing new filing requirements for consumers use tax that are similar to Colorado’s. If the use tax due is in excess of $300 at the end of any month, use tax must be remitted by the 20th of the following month. If less than $300, use tax may be remitted at the end of the calendar year before January 20. Pennsylvania (HB 542) will require use tax notification from the remote seller and provides specific language to include and penalties if the notifications are not sent to the consumer. Finally, Virginia (SB 962) provides stronger, more detailed information regarding inventory in the state. Any remote seller with inventory stored in the state will now be subject to Virginia nexus rules.

Please do not hesitate to contact your local DMA office should you have specific questions or requests.

Completely Compliance is a quarterly e-newsletter exclusively for clients and employees of DMA. It is intended to provide relevant sales/use tax news, events, and information. As such, this e-newsletter should be used for general informational purposes only, and not as a substitute for consultation with professional tax, legal, or other competent advisers. Before making any decision or taking any action based upon information contained in this e-newsletter, you should consult with a DMA professional.