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KPMG report: More state actions, economic nexus for remote sales

More state actions, economic nexus for remote sales

States continue to address or respond to the U.S. Supreme Court’s landmark decision in “South Dakota v. Wayfair.”


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In Wayfair, the U.S. Supreme Court overruled the physical presence nexus standard of Quill and National Bellas Hess with respect to state and local taxation of remote sales.


The Department of Tax and Fee Administration issued a “special notice” providing that effective April 1, 2019, remote sellers meeting the economic nexus thresholds may also need to collect certain California fees.

Specifically, out-of-state sellers that otherwise meet the economic nexus thresholds may have additional registration and collection requirements if they sell any of the following items in California:

  • New tires or motor vehicles and equipment that include new tires
  • “Covered” electronic devices
  • Lead-acid batteries
  • Lumber products or engineered wood products


Senate Bill 495 would establish an economic nexus threshold for income tax purposes for tax years beginning after December 31, 2018.

Specifically, the bill would create a presumption that a person lacking physical presence in the state is “systematically and regularly engaging in business in the State” if during the current or preceding calendar year, “the person engaged in [200] or more business transactions…or the sum of the value of the person’s gross income attributable to sources in [the] State equals or exceeds $100,000, or for a person that does business within and without the State the numerator of the person's sales factor for the State equals or exceeds $100,000.”


Another bill has been proposed in Missouri (Senate Bill 189) that would impose a sales tax collection and remittance obligation on remote sellers. If enacted, this bill would require the Director of Revenue to maintain and provide, at no cost to the user, a downloadable electronic database of taxing jurisdiction boundary changes and tax rates.

There are several Wayfair-related bills pending in the Missouri General Assembly.

New Hampshire

New Hampshire is one of five states with no sales tax. A bill (Senate Bill 242) has passed the Senate and is pending in the House, highlights the state’s opposition to the Wayfair decision.

If enacted, Senate Bill 242 would prohibit other taxing jurisdictions from imposing a sales tax collection obligation on New Hampshire sellers that lack a physical presence in that jurisdiction unless the jurisdiction registers with the New Hampshire Department of Justice. The bill would also prohibit New Hampshire sellers from complying with other states’ use tax notice and reporting laws unless the seller has provided a written notice of the request for such information to the New Hampshire Department of Justice.

New Jersey

The Division of Taxation updated a list of “frequently asked questions (FAQs) clarifying that to determine whether a remote seller has exceeded economic nexus thresholds, it is required to account for sales of tangible personal property, specified digital goods, and services made through one or more marketplaces and through its own website. Moreover, the FAQs provide that a remote seller—exceeding the economic threshold that makes sales only through one or more marketplaces—is required to register with the state, but may request, by completing Form C-6205-ST to be placed on a non-reporting basis, since the marketplace facilitator is required to collect the tax on all marketplace transactions.


The Department of Revenue issued guidance providing that effective February 1, 2019, remote sellers meeting the state’s economic nexus thresholds for sales and use tax purposes must also collect additional premier resort area taxes, assuming the sellers otherwise meet the requirements for collecting these additional taxes.

In Wisconsin, if a seller is classified under certain specified industry codes, the seller must collect premier resort area taxes on taxable sales that take place in a “premier resort area.” The affected types of businesses include a broad range of sellers, including department stores, clothing stores, bookstores, and jewelry stores as well as providers of amusement and recreation services.

Read a March 2019 report prepared by KPMG LLP

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