Kansas lawmakers override veto to enact economic nexus threshold and marketplace facilitator law

Under the existing remote seller provision, any amount of business in the state by an out-of-state seller could conceivably create an obligation to register with the Kansas Department of Revenue then collect and remit sales tax.

Every other state’s economic nexus law provides safe harbor for small remote businesses. Starting July 1, 2021, the law in Kansas will do the same. An out-of-state seller will be required to register, collect, and remit only if the retailer had:

• More than $100,000 of cumulative gross receipts from sales to customers in the state for the period of January 1, 2021, through June 30, 2021; or
• More than $100,000 of cumulative gross receipts from sales to customers in the state during the current or immediately preceding calendar year.

SB 50 specifies that a remote seller meeting the economic nexus threshold “shall not be required to collect and remit any taxes from sales occurring prior to July 1, 2021.”

The measure also brings Kansas in line with other states by making marketplace facilitators responsible for collecting and remitting the tax due on third-party sales. This applies to marketplace facilitators with a physical presence in Kansas as well as remote marketplaces with economic nexus.

When calculating the threshold, a marketplace should include both direct and indirect (i.e., third-party) sales.

Marketplace facilitators are liable for sales and use tax and transient guest taxes starting July 1, 2021. Beginning April 1, 2022, they’ll also be responsible for collecting and remitting prepaid wireless 911 fees.

Finally, SB 50 repeals the state’s click-through nexus provision for affiliated persons. States are finding it more expedient to focus on economic nexus and marketplace facilitator provisions.

To learn more about the mixed-up journey of SB 50, please read Kansas governor vetoes sales threshold for out-of-state sellers.

For state specific details about nexus and marketplace facilitator laws, see our seller's guide to nexus laws and sales tax collection requirements.