With Labor Day behind us, our white pants and disco shoes tucked away, the holidays are now near. Many retailers depend on holiday sales to buoy their profits. States, likewise, look to these as a source of sales and use tax revenue. This fall a record number of states will be looking to online retailers for this revenue.
Below are the top five changes to state nexus laws happening this fall.
1. Washington’s click-through nexus legislation was the first to go into effect from this list. Effective September 1st, it created a rebuttable presumption of nexus for online retailers with more than $10,000 in annual Washington sales resulting from click-through advertising arrangements with residents of the state.
2. Nevada enacted an affiliate nexus bill earlier this year containing a click-through nexus provision similar to Washington’s that will go into effect on October 1st. Also effective October 1, the bill includes a separate provision under which retailers will be rebuttably presumed to have nexus with Nevada if they have an affiliate performing any of the following activities in the state:
• selling a similar line of products or services as the retailer and doing so under a business name that is the same or similar to that of the retailer;
• maintaining an office, distribution facility, warehouse, storage place, or similar place of business in Nevada to facilitate the delivery of tangible personal property sold by the retailer to the retailer's customers;
• using trademarks, service marks, or trade names in Nevada that are the same or substantially similar to those used by the retailer;
• delivering, installing, assembling, or performing maintenance services for the retailer's customers in Nevada; or
3. Under legislation also effective October 1st, Michigan enacted a click-through nexus provision similar to Washington’s and Nevada’s. For the presumption of nexus to apply, Michigan adds a requirement that the retailer have more than $50,000 in annual gross receipts from sales to its residents. Also effective October 1st, the bill includes a separate provision under which retailers will be rebuttably presumed to have nexus with Michigan if they have an affiliate performing any of the following activities in the state:
• selling a similar product line as the retailer under the same or a similar business name;
• using its employees, agents, representatives, or independent contractors in Michigan to facilitate the retailer's sales to purchasers in Michigan;
• maintaining, occupying, or using an office or similar place of business in Michigan to facilitate the delivery or sale of tangible personal property sold by the retailer to the retailer's purchasers in Michigan;
• using, with the retailer's consent or knowledge, trademarks, service marks, or trade names in Michigan that are the same as or substantially similar to those used by the retailer;
• delivering, installing, assembling, or performing maintenance or repair services for the retailer's purchasers in Michigan;
• facilitating the sale of tangible personal property to purchasers in Michigan by allowing them to pick up or return tangible personal property sold by the retailer at an office, distribution facility, warehouse, storage place, or similar place of business maintained by that person in Michigan;
• sharing management, business systems, business practices, or employees with the retailer, or, for an affiliated person, engaging in intercompany transactions related to the activities occurring with the retailer to establish or maintain the retailer's market in Michigan; or
• conducting any other activities in Michigan that are significantly associated with the retailer's ability to establish and maintain a market in Michigan for the retailer's tangible personal property sales to purchasers in Michigan.
4. Surprise! Observers expect Vermont’s click-through nexus law to go into effect on December 1st. Many online retailers will still be in their post-Black-Friday refractory period. If you’ve been tracking state nexus legislation this year, you might have missed this one. Vermont passed its click-through nexus law back in 2011, but the law still hasn’t gone into effect. Whoa!? That’s because Vermont’s click-through nexus law is not set to go into effect until the state’s Attorney General determines that at least 15 other states have similar nexus provisions. With Nevada, Michigan, and Washington bringing this number to 17, Attorney General William Sorrell is expected to declare next month that this requirement has been met. The Vermont Department of Taxes has announced that if he does so, it will implement the click-through nexus law effective December 1st.
5. In the spirit of the holidays, effective October 1, Alabama is offering online retailers not otherwise considered to have nexus the opportunity to voluntarily collect and remit tax on sales to Alabama customers. Qualifying retailers that elect to do so will be permitted under the Simplified Sellers Use Tax Remittance Program to collect tax at a flat combined state and local rate of 8 percent, regardless of the combined rate applicable in the jurisdiction where the customer is located. Online retailers must apply to participate and will be permitted to keep 2 percent of the tax that they collect under the program.
In case the 2 percent collection discount is not a sufficient incentive to voluntarily collect and remit, as previously reported by Bloomberg BNA’s Chris Marr in the Weekly State Tax Report, the state is considering a rule under which all online retailers with annual sales greater than $250,000 would be required to do so.
Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: How shocked were you by Number 4?
Take a free trial to Premier State Tax Library , a comprehensive research service that delivers deep, unique analysis, and time-saving practice tools to help practitioners make well-informed decisions.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)