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US co-opt marketplaces on sales tax

  • Apr 22, 2019 | Richard Asquith

US states are increasingly forcing online marketplaces to report and collect sales taxes due by third-party sellers on their platforms.

Following the 2018 South Dakota vs Wayfair ruling on economic nexus, states have been extending the tax net to out-of-state retailers. To help limit the administrative burden for the states and the remote sellers, the states have imposed tax compliance responsibilities on the marketplace ‘facilitator’. To date, a growing majority of states have introduced sales tax collections obligations on marketplaces. However, significant differences between states' laws have emerged around issues including: 

  • The threshold for triggering economic nexus of the sellers;
  • Whether sellers can chose not to have the marketplace collect on their behalf; self-reporting instead;
  • The definition of a marketplace ‘facilitator’;
  • Reporting requirements for the marketplaces; and
  • Liabilities of the marketplaces in the case of errors or omissions.

28 states  have US Marketplace collection rules with legislation (some of the implementation dates are in the future, but the laws have been ratified). Louisiana is working on finalizing legislation; and Rhode Island is about to update its to require collection. 

The states are: AZ, AR, CA, DC, FL, GA, HI, IN, KS, KY, LA, MD, MA, MN, MO, NE, NJ, NY, PA, RI, SC, SD, TX, VT, VA, WA, WV, WY.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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