Top 10 Sales Tax Developments to Look for in 2020

If you thought 2019 was a confusing year for sales tax, wait for 2020, as more states continue to adjust their sales-tax laws.

Twenty-four states and the District of Columbia added enforcement of economic nexus in 2019, in addition to the 19 that added the burden to online retailers in 2018 after the Supreme Court overruled the physical presence rule in South Dakota v. Wayfair, Inc. More than ever, out-of-state sellers with threshold limits of sales in a given state must collect and remit sales tax.

Economic nexus laws are expected to continue to change in 2020 with updates projected from several states and with the addition of more states adopting Marketplace facilitator laws there is even more to keep watch for.  

Here are the top 10 sales-and-use-tax and marketplace facilitator items to know about for 2020 (so far).

Arizona will drop its sales-tax threshold to $150,000 from $200,000 effective with the new year – and plans to lower it to $100,000 on Jan. 1, 2021.

Georgia will drop its sales-tax threshold to $100,000 from $250,000 (or 200 transactions, which is unchanged), also effective in the new year.

Pennsylvania will require filing of corporate tax reports for tax periods starting on or after Jan. 1, with a $500,000 nexus threshold.

The Texas Comptroller has amended the franchise tax nexus rule for an economic threshold of $500,000 in annual receipts for foreign taxable entities with no physical presence in the state, this will apply to franchise tax reports due on or after Jan. 1.

Louisiana is set to begin enforcing economic nexus by July 2020. While Louisiana was one of the first states to adopt sales tax economic nexus, they won’t actually begin enforcing it until 2020.

Beginning in 2020, Hawaii will mandate that marketplace facilitators collect and remit the state’s General Excise Tax, with a threshold of $100,000 or more in income or at least 200 transactions.

Marketplace facilitators are required to collect and remit Wisconsin sales or use tax on all sales of taxable products and services that the marketplace provider facilitates on behalf of a marketplace seller.

Illinois requires marketplace facilitators to collect and remit the state’s use tax on third-party sales in the state starting Jan. 1, 2020, the threshold being $100,000 in sales of tangible personal property or taxable services or 200 or more transactions.

Thresholds of $100,000 in sales or 200 transactions in Michigan will apply to marketplace facilitators to collect and remit sales and use tax as of Jan. 1.

Market facilitators in North Carolina must collect and remit sales tax on their third-party sellers’ sales on 200 or more transactions per year or more than $100,000 in annual gross sales, effective Feb. 1, 2020.

As we enter another year of complicated and ever-changing rules of sales and use tax, don’t let the burden get too heavy. Be sure to stay ahead of all the changing rules, utilizing resources and news available, and identify how you plan to calculate and collect sales tax prospectively. Often times this lands on an internal team to manage, but for some businesses it is easier and more cost/time effective to outsource – know your options and make the best decisions for your company to stay compliant.

 As Sales Tax continues to become more complicated, know you have someone that can help. When you work with TaxConnex, we eliminate the burden and complexity of sales tax. Contact us to learn what it means when it’s all on us.