Indiana and Wyoming drop remote seller transaction threshold

Economic nexus took effect in Indiana on October 1, 2018, just a few months after the Supreme Court of the United States freed states to tax remote sales with its decision in South Dakota v. Wayfair, Inc. Like many other states, Indiana adopted roughly the same economic nexus thresholds as South Dakota: more than $100,000 in sales or 200 or more transactions in the state in the current or previous calendar year.

The 200-transactions threshold is eliminated, retroactively, effective January 1, 2024. Thus retail merchants that make 200 or more sales transactions into Indiana are no longer required to register for Indiana sales tax if they don’t meet the $100,000 sales threshold.

According to the fiscal note for Senate Bill 228, this change would reduce sales tax revenue “by an indeterminable but potentially significant amount beginning in the second half of FY 2024.” The number of affected sellers isn’t known at this time.

Wyoming began enforcing economic nexus on February 1, 2019. Under the original law, out-of-state businesses with no physical presence in the state are required to register for sales tax once they meet either of the following thresholds:

• More than $100,000 in gross revenue from the sale of tangible personal property, admissions, or services delivered into Wyoming in the current or immediately preceding calendar year, or
• 200 or more separate transactions for delivery in Wyoming in the current or immediately preceding calendar year

Starting July 1, 2024, the 200-transactions threshold is repealed due to the enactment of House Bill 197. The Wyoming Department of Revenue anticipates “no fiscal impact from this provision,” according to the fiscal note, “as many remote sellers into Wyoming meet the requirement based on the $100,000 threshold rather than the 200 separate transactions.”

Remote vendors whose sales into Indiana or Wyoming meet the 200-transactions threshold but fall beneath the $100,000 threshold must be keen to learn how soon they can stop collecting and remitting sales tax in these two states. 

Some states have trailing nexus laws that require a business to maintain their sales tax permit for a period after the business no longer has nexus with the state. Trailing nexus typically applies to businesses with a physical presence in the state but may also affect remote vendors. Indeed, some states require remote sellers to collect tax during the year following a year in which the business meets an economic nexus threshold, regardless of their sales volume in the state that following year.

It’s not always clear whether a state has a trailing nexus policy. However, as members of the Streamlined Sales and Use Tax Agreement, Indiana and Wyoming both provide relatively clear guidelines for “When is a remote seller who falls below a state’s economic nexus threshold allowed to stop collecting and remitting the tax.”

Indiana allows a remote seller to 1) cancel their sales tax registration, 2) change their status to inactive (non-filer), or 3) change their filing frequency to annual “any time after the measurement period ends.” For Indiana, the measurement period is the previous or current calendar year. (See the Streamlined Sales Tax Indiana Taxability Matrix for more details.)

Wyoming also allows a remote seller to cancel its sales tax license after the measurement period ends. Like Indiana, the measurement period for Wyoming is the previous or current calendar year. (See the Streamlined Sales Tax Wyoming Taxability Matrix for more details.)

Of course, economic nexus is just one way for a business to establish a sales tax obligation. Physical presence in a state, ties to in-state affiliates, and even referrals from in-state businesses can also trigger nexus. It’s a best practice to consult with a trusted tax advisor before acting in any way that could put your business at risk.

Indiana and Wyoming aren’t the first state to ditch the transaction threshold, and they likely won’t be the last. Ten other states have repealed their economic nexus transaction thresholds since the Wayfair decision. 

Utah lawmakers also considered repealing the state’s transaction threshold this year, but House Bill 17 failed to pass prior to the end of the regular 2024 legislative session. The Legislature will almost certainly try again. 

As of this writing, there’s a transaction threshold in effect in Alaska, Arkansas, Georgia, Hawaii, Illinois, Kentucky, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Puerto Rico, Rhode Island, Utah, Vermont, Virginia, Washington, D.C., and West Virginia. Many of these are Streamlined Sales Tax (SST) states, and SST recommends eliminating economic nexus transaction thresholds, so it will probably only be a matter of time before this list becomes considerably shorter.

We’ll let you know if and when any of these states repeal their transaction threshold. In the meantime, check out our state-by-state guide to economic nexus laws to learn about the remote seller thresholds in each state. And if you’re not sure whether your business is registered for sales tax where required, our free economic nexus risk assessment can help.