On June 21, 2018, the Supreme Court of the United States ruled in favor of South Dakota in a case regarding sales tax obligations for remote sellers. This ruling grants South Dakota the authority to impose sales tax requirements on businesses that have a certain amount of economic activity (economic nexus) in South Dakota, but no physical presence in the state. Even though this case was about the law in South Dakota, the ruling applies broadly to any state with a similar law; and there is a growing list of states enacting economic nexus laws, including three that took effect in Kentucky, Hawaii, and Vermont on July 1, 2018.
For more information on what the Supreme Court decision means to you, please see South Dakota v. Wayfair, Inc.
Avalara encourages you to review your sales volume in the states on the list, and consult with your tax professional to determine next steps. You can also use our state-by-state guide to discover what triggers economic nexus in every state that enforces it.
Avalara also has a Tax Advisory Services team that can help you determine your nexus obligations and navigate the tasks related to staying compliant. Please contact your Customer Account Manager (CAM).
Once you have determined your sales tax (nexus) obligations, if you need assistance with AvaTax product settings, please see this information in our Avalara Help Center:
What types of companies and customers will be impacted by these states' expanded sales tax (economic nexus) laws?
The expanded economic nexus laws apply to remote sellers that are not currently registered with the state. Rather than require a physical presence in a state, the listed states may now enforce economic nexus laws, which are based entirely on sales revenue, transaction volume, or a combination of both. This applies to both online and offline transactions, but does not apply to tax exempt sales.
If you are a remote seller already registered with a state with an expanded sales tax (nexus) law, this ruling does not affect you.
How do I know if I need to file and register with a state based on the expanded sales tax (economic nexus) laws?
We recommend that customers work directly with a SALT CPA tax advisor, who can counsel you on nexus related requirements and laws. Avalara has an extensive partner referral program with tax experts and SALT CPAs who would be happy to work with you and provide nexus studies.
Go here for a list of our CPA partners: Sales Tax Expert Directory
You can also work directly with Avalara’s Tax Advisory Services for a nexus study or other related tax compliance engagements. Please contact your Customer Account Manager (CAM).
What other states besides South Dakota are imposing the same type law, and when do the laws go into effect?
Each has different statutory start dates and sales/transactions requirements that trigger nexus.
How do I change my Avatax settings so that sales or sellers use tax is calculated for transactions in states with expanded sales tax (economic nexus) laws?
Once you have established nexus and determined your tax reporting obligations start date, you will need to register with the taxing jurisdiction(s) to be authorized to collect tax reimbursement and begin tax reporting.