Transaction Thresholds: Vanishing Acts?

The landscape of economic nexus thresholds for sales tax obligations in the United States has been evolving, following the 2018 Supreme Court Wayfair decision. Initially, many states adopted a dual threshold system based on the dollar volume of sales and the number of transactions. However, there's a growing trend of states eliminating the transaction-based thresholds, which are considered burdensome and provide minimal economic benefit. States like South Dakota, California, Colorado, and others have dropped these thresholds, focusing solely on sales volume for tax obligations. Small remote sellers are significantly impacted by these thresholds, often facing compliance challenges even with low sales volumes.

We advise sellers to stay informed about state-specific thresholds, understand taxability and exemptions, and consider the complexities added by marketplace facilitators and subscription models. The future may see more states eliminating transaction thresholds, simplifying compliance for sellers. TaxConnex offers services to help businesses manage these complexities and stay compliant.

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