If you are a sales tax enthusiast, you may be tired of hearing people say the name Wayfair! If you are not such an enthusiast, this is probably the first time you have heard the name Wayfair.
Since the Supreme Court’s historic 5-4 ruling in South Dakota v. Wayfair, states across the country have been quite active in updating their sales and use tax laws in order to permit them to comply with the decision. So what did the decision do exactly? Basically, the court decision removed the prohibition on states wishing to impose sales tax collection duties on certain out-of-state sellers. Prior case law required-out-of-state sellers to have some physical presence in the state before states were allowed to require those companies to collect and pay sales tax. In its ruling, the court recognized the economic realities of online commerce and overruled the physical presence requirement.
Specifically, South Dakota’s law permitted the state to require certain out-of-state sellers to collect and pay sales tax on sales in the state. If a retailer either delivers $100,000 of goods or services or engages in 200 or more separate transactions, they are subject to South Dakota’s law. In fact, just last month New York State issued guidance that requires:
A business that had no physical presence in New York State but has both made more than $300,000 in sales of tangible personal property delivered in the state and conducted more than 100 sales of tangible personal property delivered in the state in the immediately preceding four sales tax quarters is required to register as a sales tax vendor, and collect and timely remit the applicable state and local sales tax.1
Rounding out the other states in our territory, below are the general rules in this post-Wayfair environment:
Rhode Island General Laws § 44-18.2-3 requires all non-collecting retailers who in the previous calendar year made $100,000 or more in gross revenues from sales in Rhode Island or 200 or more transactions in Rhode Island to either (1) register for a Rhode Island sales tax permit and collect and remit the sales or use tax in Rhode Island or (2) comply with various notice requirements in the statute.2
The new law, which took effect December 1, 2018, requires out-of-state retailers that regularly or systematically solicit sales of tangible personal property in Connecticut to collect and remit sales tax if they had at least (1) $250,000 in gross receipts and (2) 200 retail sales in Connecticut during the preceding 12-month period (ending September 30).3
An Internet vendor with a principal place of business located outside the state and not otherwise subject to tax is required to register, collect and remit Massachusetts sales or use tax when, during the prior 12 month period, it had in excess of $500,000 in Massachusetts sales from transactions completed over the Internet and made sales resulting in a delivery into the state in 100 or more transactions.4
A seller not otherwise required to register under Maine sales tax law meets the requirements of section 1951-B if, during the current or previous calendar year, it either sold tangible personal property, products transferred electronically, or taxable services for delivery into Maine in at least 200 separate transactions, or its gross revenues from Maine sales of tangible personal property, products transferred electronically, or taxable services exceeded $100,000.5
The remote seller's gross revenue from sales of tangible personal property, specified digital products, or services delivered into New Jersey during the current or prior calendar year, exceeds $100,000; or the remote seller sold tangible personal property, specified digital products, or services delivered into New Jersey in 200 or more separate transactions during the current or prior calendar year.6
It is critical that you talk with your Farm Credit East tax professional in order to begin navigating this brave new world of sales tax in the age of the internet.
1 New York State Department of Tax and Finance, N-19-1, available at tax.ny.gov/pdf/notices/n19-1.pdf.
2 Rhode Island Department of Revenue, FAQS for Non-Collecting Retailers (Remote Sellers) Following Wayfair Decision, available at tax.ri.gov/notice/Remote_seller_FAQs_07_06_18.pdf.
3 Office of Legislative Research, Internet Sales Tax After Wayfair, available at cga.ct.gov/2018/rpt/pdf/2018-R-0297.pdf.
4 Department of Revenue, TIR 18-8: Tax Jurisdiction Over Internet Vendors Prior to and Subsequent to Wayfair, Inc. v. South Dakota, available at mass.gov/technical-information-release/tir-18-8-tax-jurisdiction-over-internet-vendors-prior-to-and.
5 Department of Administrative and Financial Services Maine Revenue Services, Maine Revenue Services Issues Guidance for Remote Sellers, available at maine.gov/revenue/salesuse/salestax/RemotesellersGuidance.html.
6 Department of the Treasury, Sales Tax Information for Remote Sellers (P.L. 2018, c. 132) (Effective November 1, 2018), available at state.nj.us/treasury/taxation/remotesellers.shtml.