Unconstitutional State Internet Sales Tax Update

State legislatures picked up where they left off following an active 2019 on Internet sales tax (IST).  States have swiftly moved to adopt laws requiring out of state sellers without a physical presence in their state to collect and remit sales tax in the wake of the U.S. Supreme Court’s decision on South Dakota v. Wayfair. Nearly every state with sales tax has adopted a remote seller law, and 39 jurisdictions (38 states plus Washington, DC) have extended collection requirements to “marketplace facilitators” like eBay.

In states with marketplace facilitator laws, businesses are required to calculate, collect, and remit sales tax on behalf of sellers for items shipped to customers in the state.

  • Colorado

Legislation to amend Colorado’s existing IST laws was set aside to be studied following the conclusion of the legislative session. The bill, SB 20-099, proposed to increase the dollar threshold for economic nexus for purposes of retail sales made by retailers without a physical presence in Colorado from $100,000 to $200,000. The issue will now be examined further by the Sales and Use Tax Task Force later this year.

  • Florida

A Senate bill requiring marketplace providers and out of state retailers with no physical presence in Florida to collect sales tax has advanced through two legislative committees. The bill, SB 126, will next go to the Senate Appropriations Committee before potentially receiving a vote by the full Senate. A related House bill has not moved since introduction. Florida is one of two states that has not adopted an economic nexus law for remote sellers, and one of five states that has not adopted a marketplace facilitator law.

  • Georgia

The Legislature moved quickly to resurrect and pass a bill from 2019 requiring marketplace facilitators to collect and remit tax. HB 276 was subsequently signed by Governor Brian Kemp and will take effect April 1st of 2020.

  • Kansas

The Legislature is considering several measures that would (1) revise the requirements for remote sellers without a physical presence in Kansas to collect and remit sales tax, and (2) establish marketplace facilitator collection and remittance obligations. Kansas has proposed an effective date of July 1st, 2020.

  • Missouri

Several bills have been filed to impose requirements for remote seller and marketplace facilitators to collect and remit tax. Similar legislation was considered in 2019. Like Florida, Missouri has not adopted an economic nexus law for remote sellers or marketplace facilitators.

  • Mississippi

A marketplace facilitator bill, HB 379, was recently introduced by Representative Trey Lamar. As introduced, the bill would become effective upon enactment.

  • Tennessee

Identical bills imposing collection and remittance responsibilities on marketplace facilitators have been introduced in the House and Senate. The bills mirror the model bill prepared by the National Conference of State Legislatures (NCSL). If enacted, the requirements would take effect October 1st, 2020.

As states debate new IST laws or seek to revisit their existing requirements, eBay will continue to advocate for workable tax policies that provide reasonable small business protections and streamline collecting and remitting standards across the states to avoid confusion, mistakes, and costly penalties.

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