US 1 Oct Super Sales Tax Tuesday

On Tuesday 1 October 2019, the imposition of US sales tax obligations on foreign (‘remote’) sellers and marketplaces goes full throttle.  This will include new tax laws for Texas, the country’s second most populous state.

More than twelve new states will extend or update the requirements on remote sellers and marketplaces to tax local consumers with sales tax. This follows the 2018 South Dakota vs Wayfair Supreme Court ruling that created a new 'economic nexus' test. This set the trigger for collecting sales tax as merely selling to consumers remotely. Previously, states would require some actual presence in the state - known as 'physical nexus' - before taxing obligations where established. Physical nexus was interpreted differently across the 45 states that levied a sales tax – from local staff, premises, stocks to merely a visiting sales team. The Wayfair economic nexus test extended this to just selling across state lines by out-of-state sellers over a local state registration threshold.

The following seven states will implement economic nexus on 1 October 2019: Arizona, Kansas; Maryland (extending the existing law); Massachusetts; Minnesota; Tennessee; and Texas. 

In addition, the following states will impose marketplace facilitator collection requirements: Arizona; California; Colorado; Maine; Maryland; Massachusetts; Minnesota (extending existing law); Nevada; North Dakota; Texas; Utah; and Wisconsin. The marketplace facilitator laws requires in and out-of-state marketplaces hosting online sales by remote sellers to collect sales tax on their behalf. Again, there is a registration threshold, but these can differ significantly from state-to-state.