South Dakota v. Wayfair, Inc.

New sales tax rules for remote (online and off-line) sellers

What remote sellers need to know

On June 21, 2018, the Supreme Court of the United States ruled in favor of the state in South Dakota v. Wayfair, Inc. The decision allows states to tax remote sales. What does it mean for out-of-state sellers? 

It used to be that states could only tax sales by businesses with a physical presence in the state. Now economic activity in a state — economic nexus — can trigger a sales tax collection obligation. Economic nexus is based entirely on sales revenue, transaction volume, or a combination of both. 

South Dakota blazed the trail, and other states are following close behind. Here’s a look at how the court’s decision is changing the world of sales tax compliance. 





Remote seller nexus by state

as of November 29, 2018

Economic nexus is sweeping the nation in the wake of South Dakota v. Wayfair, Inc., but it’s important to remember that states also have other ways of taxing remote sales: affiliate nexus (ties to in-state affiliates), click-through nexus (links on in-state websites), cookie nexus (placing software or apps on in-state devices), tax on marketplace sales (facilitator held liable), and non-collecting seller use tax reporting (non-collecting sellers must share consumer use tax information). See the chart below for more details.

Click here for a state-by-state guide to sales tax economic nexus rules.

More questions? Read our full FAQ here.


Remote seller nexus thresholds
as of December 10, 2018

Sales tax states Economic nexus effective date Economic nexus thresholds triggering a collection obligation ($ and/or transaction volume)
Transaction included in economic nexus threshold test Other forms of remote seller nexus, with effective date

Alabama

10.1.2018

More than $250,000
and
additional activities

 

Retail sales of products* delivered into the state

Non-collecting seller use tax reporting: 7.1.2017

Tax on marketplace sales: 1.1.2019

Arizona

 

 

 

Tax on marketplace sales: 9.20.2016

Arkansas

 

 

 

Affiliate/Click-through nexus: 2011

California

 

 

 

Affiliate/Click-through nexus: 2011

Colorado

12.1.2018 (there is a grade period until June 1, 2019)

$100,000 or more
or
200 separate transactions
 

Gross sales or services delivered into the state, including exempt sales

Non-collecting seller use tax reporting: 7.1.2017

Affiliate/Click-through nexus: 2014

Connecticut

12.1.2018

At least $250,000
and
200 or more retail sales
and
systematic solicitation of sales in the state via the internet or other means    
 

Retail sales of products* delivered into the state

Non-collecting seller use tax reporting for referrers: 7.1.2019

Tax on marketplace sales: 12.1.2018

Florida**

 

 

 

 

Georgia

1.1.2019

More than $250,000
or
200 or more retail sales
 

Retail sales of products* delivered into the state electronically or physically

Affiliate/Click-through nexus: 2012

Hawaii

7.1.2018

At least $100,000
or 
200 or more separate transactions

Retail sales of products*, intangible property, or services used/consumed or delivered in the state

 

Idaho

 

 

 

Click-through nexus: 7.1.2018

Illinois

10.1.2018

At least $100,000
or
200 or more separate sales
 

Sales of products* in the state, including exempt sales but not sales for resale

Affiliate nexus: 2011

Click-through nexus: 2015

Indiana

10.1.2018

More than $100,000
or
200 or more separate transactions  
 

Sales of products*, electronically transferred products, or services delivered in the state

 

Iowa

1.1.2019

At least $100,000
or
200 or more separate transactions

Sales of products*, services, or specified digital products into the state

Tax on marketplace sales: 1.1.2019

Non-collecting seller use tax reporting: 1.1.2019

Cookie nexus: 1.1.2019

Affiliate nexus:
2013

Kansas

 

 

 

Affiliate/Click-through nexus: 2013

Kentucky

10.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products* or digital property delivered or transferred electronically into the state

Non-collecting seller use tax reporting: 7.1.2013

Louisiana

1.1.2019

More than $100,000
or
200 or more separate transactions

Sales of products*, products transferred electronically, or services delivered into the state

Non-collecting seller use tax reporting: 7.1.2017

Affiliate/Click-through nexus: 2016

Maine

7.1.2018

More than $100,000
or
200 or more separate transactions

Gross sales of all products*, electronically transferred products, or services delivered into the state, whether taxable or not

Affiliate/Click-through nexus: 2013

 

Maryland

10.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products* or taxable services delivered into the state

 

Massachusetts

 

 

 

Cookie nexus: 10.1.2017

Michigan

9.30.2018

At least $100,000
or
200 or more separate sales

Sales of products* or services in the state

Affiliate/Click-through nexus: 2015

Minnesota

10.1.2018

10 or more retail sales totaling more than $100,000
or
100 or more retail sales

Retail sales from outside Minnesota into the state

Tax on marketplace sales: 10.1.2018

Click-through nexus: 7.1.2019

Affiliate nexus: 2013

Mississippi

9.1.2018

More than $250,000
and
systematic exploitation of the market in the state

Sales into the state

 

Missouri

 

 

 

Affiliate/Click-through nexus: 2013

Nebraska

1.1.2019

More than $100,000
or
200 or more separate transactions

Gross sales into the state

 

Nevada

10.1.2018 (If threshold is met 10.1.2018, collection will start 11.1.2018)

More than $100,000
or
200 or more separate transactions

Sales into the state

Affiliate/Click-through nexus: 2015

New Jersey

11.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products,* specified digital products, or services delivered in the state

Click-through nexus: 2014

Tax on marketplace sales: 11.1.2018

New Mexico**

 

 

 

 

New York

 

 

 

Affiliate/Click-through nexus: 2008

North Carolina

11.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products* or services delivered in the state

Click-through nexus: 2009

 

North Dakota

10.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products* and other taxable items delivered into the state

 

Ohio

 

 

 

Cookie nexus: 1.1.2018

Affiliate/click-through nexus: 2015

Oklahoma

 

 

 

Non-collecting seller use tax reporting: 7.1.2018

Tax on marketplace sales: 7.1.2018

Affiliate nexus: 2016

Pennsylvania

 

 

 

Non-collecting seller use tax reporting: 3.1.2018(additional requirements 4.1.2019)

Tax on marketplace sales: 3.1.2018 (additional requirements 4.1.2019)

Affiliate/Click-through nexus: 2011

Rhode Island

 

 

 

Non-collecting seller use tax reporting: 8.17.2017

Tax on marketplace sales: 8.17.2017

Cookie nexus: 8.17.2017

Affiliate/Click-through nexus: 8.17.2017

South Carolina

11.1.2018

More than $100,000

Sales of all products*, electronically transferred products, or services delivered into the state, whether taxable or exempt

Tax on marketplace sales: 11.1.2018 (This is being challenged; the outcome of the lawsuit could impact enforcement)

South Dakota

11.1.2018

More than $100,000
or
200 or more separate transactions

Sales of products*, electronically transferred products, or services delivered into the state

Non-collecting seller use tax reporting: 2011

Tax on marketplace sales: 3.1.2019

Tennessee

7.1.2017 (under an injunction until further notice)

More than $500,000
and systematic solicitation of sales in the state

Sales into the state

Affiliate nexus: 2014

Click-through nexus: 2015

Texas

 

 

 

Affiliate nexus: 2012

Utah

1.1.2019

More than $100,000
or
200 or more separate transactions

Sales of products*, electronically transferred products, or services delivered into the state

Affiliate nexus: 2012

Vermont

7.1.2018

At least $100,000
or
200 or more individual sales transactions
and
systematic solicitation of sales in the state

Sales into the state

Non-collecting seller use tax reporting: 7.1.2017

Click-through nexus: 2015

Virginia

 

 

 

Tax on marketplace sales: 6.1.2017

Affiliate nexus: 2013

Washington

10.1.2018 (for remote transactions)

7.1.2017 (for B&O tax only)

More than $100,000
or
200 or more individual sales transactions


More than $267,000 of yearly gross receipts sourced or attributed to WA in 2017, $285,000 in 2018
or
at least 25% of total yearly gross receipts sourced or attributed to WA

 

Retail sales into the state

Non-collecting seller use tax reporting: 1.1.2018

Tax on marketplace sales: 1.1.2018

Click-through nexus: 2015

West Virginia

1.1.2019

More than $100,000
or
200 or more separate transactions

Sales of taxable and nontaxable products* and services

Affiliate nexus: 2014

Wisconsin

10.1.2018

More than $100,000
or
200 or more separate transactions

Sales of taxable and nontaxable products* and services

 

Wyoming

2.1.2019

More than $100,000
or
200 or more separate transactions

Taxable, exempt, and wholesale sales of products*, admissions, or services delivered into the state

 

Washington, D.C.**

 

     

* State sales tax laws generally use the term "tangible personal property" (TPP).  TPP is property that can be perceived by the senses, i.e., seen, weighed, measured, felt, or touched. For simplicity, we're using "products."

** No remote sales tax law at this time.


Use the South Dakota v. Wayfair filter to watch expert videos and get answers to the following questions and more:

  • Could other states follow South Dakota's lead?
  • What can out-of-state sellers do now to prepare?
  • Why should companies automate sales tax?

More questions? Ask the experts.

From our blog

Read more about the Supreme Court ruling.

Frequently asked questions

Read our most frequently asked questions and answers here.

Q&A forum

Watch our video Q&A forum with tax experts Scott Peterson and Rachel A. LeMieux, CPA, CMI.

Comprehensive guide

Discover everything you wanted to know about South Dakota V. Wayfair, Inc. and its impact on remote sellers with our comprehensive guide.


Avalara can help you

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