A new year brings new sales tax changes for some states. As of January 1, economic nexus has taken effect and become active in Missouri. More changes may follow suit.
It’s a new year, which means there are changes to be aware of! State tax changes take effect either at the beginning of the calendar year (January 1) or the beginning of the fiscal year (July 1). According to the Tax Foundation, “thirty eight states have noteworthy tax changes taking effect.” Check your state here to stay informed on any changes that may affect you or your business.
For today’s focus, we are going to take a look at the change in states with economic nexus. This summer will mark 5 years since the momentous 2018 Supreme Court case South Dakota v. Wayfair, Inc. decision that established the sales tax landscape retailers and eCommerce sellers know today. Many businesses are still trying to navigate their way through the new obligations. As of January 1, every state with sales tax has economic nexus.
Changes With The New Calendar Year
- Missouri: Mid-2021 Missouri Governor Mike Parson signed SB153, which allowed Missouri and local jurisdictions to collect use tax and to help protect local brick-and-mortar businesses. It came into effect January 1, 2023; allowing the state and its local jurisdictions to be able to collect a use tax from remote sellers who sell and deliver more than $100,000 in tangible goods to consumers in the state annually.
- Another plug for Missouri, their marketplace facilitator laws have changed. They now require marketplace facilitator platforms to collect and remit sales tax for their sellers.
Potential Changes to Watch For:
- Alaska: Economic nexus may be making its way to one of the five states (Delaware, Montana, New Hampshire, Alaska and Oregon) that don’t have sales tax. Recently, Alaskan communities began coming together to create the Alaska Remote Seller Sales Tax Commission to provide administration of sales tax collection and remittance. The state has looked into several models for an Alaskan sales tax which includes seasonal sales tax and a year-round sales tax. It has yet to be determined which way the state will decide.
As the year progresses there may be more changes with each state, but here are three things to keep in mind as we move forward.
- Not all economic nexus thresholds are the same. States can force out-of-state sellers to collect sales tax if they have at least $100,000 in gross revenue OR at least 200 transactions into the state. However, some states have adjusted their thresholds to accommodate different revenue and transaction counts.
- Economic nexus does not replace physical presence rules. Economic nexus is a tax that works alongside physical presence nexus. Every business must be cognizant of both.
- Some states fix thresholds by gross receipts and others choose to go by taxable sales, some by looking at the previous calendar year, and some by a rolling 12 months.
If you find you are needing assistance understanding your sales tax obligations feel free to reach out to us. Whether it’s determining your nexus footprint, knowing the taxability of your products/services or anything else related to sales tax, please sign up for a free consultative call and we can help you find peace of mind knowing you are compliant.