Biggest Sales Tax Trend in 2019: New State Requirements for Marketplace Facilitators

In March 2019, Idaho – one of the last holdouts to join every other state with a sales tax – proposed economic nexus legislation. What’s interesting to note about Idaho’s legislation is the inclusion of marketplace nexus provisions. This is in line with the biggest 2019 sales tax trend across the states: new requirements for marketplace facilitators.

Marketplace facilitators are companies such as Amazon and eBay Inc., who aid sellers with the sale of goods and services by advertising the goods for sale, collecting payment from the purchaser on behalf of the seller, either directly or indirectly, and remitting payment back to the seller.

In the wake of favorable outcome for states in South Dakota v. Wayfair Supreme Court case, more states are looking to adopt marketplace facilitator rules. By placing the responsibility of sales tax on the facilitator, rather than the seller, these laws give states the ability to gather sales tax revenue that they may have otherwise missed and it is a more cost effective way for the states to claim this revenue.

For sellers, marketplace facilitator laws means the facilitator will handle collecting and remitting sales taxes on your behalf in states where you make sales through their platform. However, be careful to not let your sales tax permits lapse in those states! Remember, the marketplace facilitator is only handling the transactions conducted on their site. If you sell items through your own website, you are still required to have a current license or permit.

In Iowa, the law states that marketplace facilitators who generate $100,000 or more in sales or generate sales in 200 or more separate transactions, must get an Iowa retail sales tax permit and file sales tax returns. The law also requires many sellers with a retailer’s use tax permit to get a sales tax permit instead.

In Minnesota, the law requires that marketplace facilitators in Minnesota collect Minnesota sales tax on behalf of third-party sellers.

To date, legislation regarding marketplace facilitators has not been adopted in other BerganKDV markets, including Nebraska and Missouri. However, there are more than 20 states currently considering legislation.

One way to stay ahead of these rapidly changing state laws is to think about automating how you collect sales tax. If you can answer “yes” or “I don’t know” to any of the questions below, your online business could be impacted by the changes made to state sales tax legislation:

  1. Do you currently sell either online or through mail order?
  2. Do you sell in multiple taxing jurisdictions?
  3. Do you have click-through nexus in multiple states?
  4. Is your business registered in all states where you currently do business?
  5. Do you manage monthly returns manually?

Not sure what to do next? BerganKDV can help you navigate changing sales tax landscape. Want to learn more about what we can do for you? Start here.

CATEGORIES: Featured | Tax & Audit
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