Remote Sales and Economic Nexus – Change is Coming!

Louisiana, Massachusetts, Tennessee and Wyoming all recently announced changes that impact remote sales and economic nexus – details are below. Look for an update later this month from our sales and use tax group on the pending settlement of software issues.

Louisiana

State of Louisiana approved House Bill 1121 effective July 1, 2017. This bill states that an out-of-state vendor which is not subject to sales tax where the cumulative sales of the retailer and its affiliates exceed $50,000 per calendar year must:

At the time of the sale – Provide Louisiana purchaser with notice that its purchase is subject to use tax:

• By January 31st of each year – send a notice to their Louisiana purchasers that contains the amount of purchases completed in Louisiana for the preceding calendar year
• By March 1st of each year, file an annual statement with the Louisiana Department of Revenue that includes the total amounts paid by purchaser(s) in the previous calendar year

Massachusetts

State of Massachusetts issued directive 17-1 (April 3, 2017) requiring internet vendors or businesses making remote sales into Massachusetts to collect and remit tax if they meet the following classifications:

• Massachusetts sales for the preceding 12-month period exceed 500,000; and
• The business made sales for delivery into Massachusetts in 100 or more transactions.

This new economic nexus standard is effective on July 1, 2017.

Tennessee

State of Tennessee issued Rule 1320-05-01-.129 (effective January 1, 2017) (“Rule 129”) stating the following:

An out of state seller / remote seller has substantial nexus in the state if:

• It engages in the regular or systematic solicitation of customers in the state through any means; and
• During the previous 12-month period, its Tennessee sales exceeded $500,000

Any business meeting these qualifications must register for sales and use tax purposes, and report and pay on sales of tangible personal property and other taxable items delivered to Tennessee consumers beginning July 1, 2017.

Wyoming

State of Wyoming passed House Bill 19 (March 1, 2017) stating the following:

A vendor has sales and use tax nexus in Wyoming if:

• During the current or preceding calendar year, the business’ Wyoming sales exceed $100,000, or it has more than 200 individual sales transaction with Wyoming customers

This bill is effective July 1, 2017. This allows the Department of Revenue to seek a declaratory judgment that economic nexus law is valid, which would also delay the effective date of the bill.

If you have questions or would like to talk to us about other sales and use tax matters, please call Smith and Howard’s Sales and Use Tax practice leader, Tim Howe, at 404-874-6244 or fill out the form below.