The U.S. Supreme Court decision in South Dakota v. Wayfair (“Wayfair” ) created enormous changes to how businesses making remote sales into states handle sales tax. Here are some updates for Florida, Missouri, and Colorado. If you do business across state lines, or with customers across state lines, get in touch to learn how Wayfair and these updates may impact your business.
Florida Sales Tax Updates
The registration deadline for remote sellers and marketplace facilitators who have met the sales thresholds for the state of Florida ($100,000/year) is October 1, 2021. Those who fail to register may be subject to penalties and interest on remote sales prior to July 1, 2021.
Missouri Sales Tax Updates
Missouri is the last state to enact economic nexus pursuant to Wayfair. On June 30, 2021 the governor signed into law SB 153, which requires remote sellers and marketplace facilitators who have met the sales threshold for the state of Missouri ($100,000/year) to register starting on January 1, 2023.
Part of the delay in Missouri’s adoption of economic nexus is the complex nature of the state’s sales and use tax system. Missouri has over 2,000 local taxing jurisdictions and the sales and use tax rates often differ. The Missouri Department of Revenue currently provides a sales tax rate mapping tool, but no such tool exists for the use tax rate. And, as the purchase transactions are taking place outside of the state, the use tax rate is applicable for these remote sales. The new law requires the state to create a similar mapping tool for the use tax rates. The department must also provide reasonable notice of taxability changes.
Colorado Sales Tax Updates
The Colorado Municipal League (CML) developed the “Model Ordinance on Economic Nexus and Marketplace Facilitators” in 2020 in an attempt to help Colorado municipalities capture local sales tax from remote sellers and marketplace facilitators.
The ordinance establishes economic nexus in the cities when the remote seller or marketplace facilitator makes retail sales into the city and has made retail sales into the state exceeding the threshold amount of $100,000 a year.
As a workaround to potential legal challenges, the state of Colorado created the single point of remittance for State and home rule city sales and use tax for sellers who wish to remit local taxes along with their state taxes. The portal is intended to lessen the risk of a constitutional challenge by removing the “burden” on interstate commerce.
As of June 15, 2021, forty-three municipalities have adopted the ordinance including Denver, Denver Metro, Colorado Springs, and Fort Collins. The CML has advised municipalities who have not signed onto the ordinance to continue with voluntary compliance from sellers. The CML also advises municipalities who have signed on that there is a risk associated with adoption and they should have discussions with their municipal attorney before moving forward with enforcement.
What do these Changes Mean for My Business?
Depending on your industry, type of business activities, and your specific facts & circumstances, applying these rules can be complicated. If you do business in these states or others, we can help you determine the next steps in navigating Sales Tax in the post-Wayfair world. Our State and Local Tax team is available to help you.