Nebraska to tax remote sales and marketplace providers, July 2019
Last updated 3.29.2019: Gov. Ricketts signed the the remote sales tax bill into law on March 21, 2019. According to the Nebraska Department of Revenue, it takes effect April 1, 2019. Additional information.
The Nebraska Legislature sent a remote sales tax bill to Governor Pete Ricketts on March 18, 2019, and he's expected to sign the measure into law. However, he may not get to it right away; he’s currently focused on helping his state survive historic flooding.
States won the right to require remote sellers to collect and remit sales tax on June 21, 2018, when the Supreme Court of the United States overruled a longstanding physical presence rule in South Dakota v. Wayfair, Inc. Prior to Wayfair, states were restricted to taxing sales by businesses with a physical presence in the state.
Shortly after the Wayfair ruling, the Nebraska Department of Revenue issued a statement that effective January 1, 2019, it would enforce the existing sales and use tax statute “consistently with the Supreme Court’s decision in Wayfair.” Thus, it would allow "an exception for remote sellers with sales of $100,000 or less or with fewer than 200 separate transactions in the state annually.”
At the time, Nebraska sales tax law didn't have a clear remote sales tax policy that would allow it to fully take advantage of the Wayfair ruling. It still doesn't. LB284 would change that.
Department of Revenue rule to become law
Should Gov. Ricketts sign LB284 as expected, the state will enforce economic nexus as described in the Wayfair decision. It will also require certain marketplace vendors to collect and remit sales tax on behalf of their sellers. According to the bill's statement of intent, the new law will apply to sales made after July 1, 2019, to allow "time for the Department of Revenue to develop rules and forms, and for businesses to develop procedures to comply.”
Economic nexus for remote sellers
The measure imposes a sales tax collection obligation on a remote retailer who sells to Nebraskans through a website or other digital medium/media, or who uses a multivendor marketplace platform or facilitator to make sales in the state, if in the current or previous calendar year:
- The retailer’s total sales of tangible personal property in Nebraska exceed $100,000; or
- The retailer makes 200 or more separate retail sales of tangible personal property in the state.
Once one of the above economic nexus thresholds has been met, the remote retailer must obtain a permit and begin collecting Nebraska state and local sales tax on or before the first day of the second calendar month after the threshold was exceeded.
Sales tax collection obligation for marketplace providers
However, LB284 also requires a marketplace provider meeting one or both of the above economic nexus thresholds ($100,000 in sales made or facilitated, or 200 transactions made or facilitated) to collect and remit sales tax on behalf of its third-party sellers. Thus, a marketplace seller is not required to collect or remit tax on sales made through a collecting marketplace.
Nonetheless, the seller is still required to register with the Nebraska Department of Revenue and file sales tax returns. Taxes collected and remitted by a multivendor marketplace platform must be included in the seller’s gross receipts, but the seller may claim credit for any sales taxes collected and remitted by the platform.
Approximately a dozen states currently impose sales tax collection requirements on marketplace facilitators, and more than 20 are considering a similar marketplace facilitator provision this year. Additionally, more than 30 states have already adopted economic nexus.
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