February 2021

In the wake of South Dakota v. Wayfair Inc., states have been making substantial changes to its sales tax laws. Economic nexus was introduced to the country, and to the world. In addition to economic nexus rules, marketplace facilitator laws were put into effect by a majority of states as well.

Rather than trusting internet sellers to charge sales tax, (since you can imagine how that does not always happen), states have required marketplace facilitators to collect and remit sales tax, despite whether the seller has nexus. Remember when buying from an online website almost always meant no sales tax? Well, those days are quickly diminishing. Websites like Amazon, Etsy, and eBay now must charge sales tax in the more than 30 states that have marketplace facilitator laws. This is despite the fact that Amazon, Etsy, and eBay may not be the actual seller.

However, surprisingly one such state that does not have a marketplace facilitator law, or an economic nexus law, is Florida. Thus far, Florida requires residents to self-assess use tax on out of state purchases. Florida lawmakers feel they are losing out on substantial sales tax revenue, estimated to be between $400 and $700 million a year. A bill has been introduced to the House and Senate. The new law would shift the burden of sales tax remittance to the seller rather than the buyer. It would require all remote sellers and marketplace facilitators to collect and remit Florida sales tax once 200 sales transactions or $100,000 of sales is made into the state.

As these laws are becoming the standard in states, it would not be surprising if the Florida legislature adopts the bill when the regular session convenes in March.

If you or your client want more information about marketplace facilitator or remote seller laws, contact Sales Tax Defense.

Success Story

Foreign Companies Must Worry About Nexus Too

A company located outside the United States made substantial sales of materials used in cancer research to labs, schools, and hospitals within almost all of the 50 states. While the company itself did not have a physical presence in the US, it did have a sister company with a warehouse in the US.

The company wanted to know what sales tax rules to follow and came to Sales Tax Defense. After reviewing its sales numbers for the past year, we determined which states it likely had an economic nexus presence. We provided sales tax guidance in nine specific states. We also reviewed their invoices and discussed the best way to word its product for sales tax purposes in each of the nine states.

The company’s goal is to continue to grow and expand within the United States. Sales Tax Defense was able to help them establish good sales tax policies. As sales increase and they establish nexus in more and more states, we will continue to guide the company through the confusing world of sales tax laws.