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KPMG report: State legislative actions, sales and use tax guidance

State legislative actions, sales and use tax guidance

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

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

In recent weeks, legislation in a number of states has been signed into law, been passed, or is in various stages in the process. Additionally, state tax administrators continue to provide guidance. 

California

Assembly Bill 147, which would adopt a $500,000 economic nexus standard for remote sellers and marketplaces, has passed the Assembly, but is still pending in the Senate. However, the California Department of Tax and Fee Administration had previously issued guidance mandating that effective April 1, 2019, sellers meeting a $100,000/200 transactions threshold must begin collecting and remitting use taxes on sales made to California customers. Also effective April 1, 2019, any retailer whose sales into a local California district exceed the $100,000/200 transactions threshold will be considered to be engaged in business in that district and will be required to collect that district's use tax.

Kentucky

Enacted comprehensive tax legislation (HB 354) includes provisions requiring certain marketplaces to collect and remit sales tax. Read TaxNewsFlash

New York

The Department of Taxation and Finance issued “frequently asked questions” (FAQs) related to registration for remote sellers, noting the New York economic nexus standard of over $300,000 of gross receipts and over 100 sales transactions in the state has been the law in the state for decades, and the due to the U.S. Supreme Court’s ruling in Wayfair, automatically became operative and enforceable on June 21, 2018.  

The FAQs clarify that both taxable and exempt sales count toward the gross receipts threshold and “each invoice, sales slip, contract, or other memorandum of sale issued for the sale of tangible personal property delivered into New York State,” for retail or wholesale, counts towards the transaction threshold. The FAQs also address the “lookback period,” vendor registration, and what happens when a taxpayer has registered to collect and remit sales tax because it met the thresholds, but its sales have since fallen below the thresholds for the most recent four sales tax quarters.

North Dakota

The governor signed S.B. 2338 imposing a sales tax collection and remittance obligation on marketplace facilitators if, in the prior or current calendar year, the broadly defined marketplace facilitator has sales of tangible personal property or other products or services exceeding $100,000. 

Virginia

The governor signed two bills (HB 1722, SB 1083) establishing a sales tax collection and remittance obligation for remote sellers and marketplace facilitators.

 

Read an April 2019 report prepared by KPMG LLP

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