As we approach the first anniversary of US Supreme Court’s game-changing sales tax decision in Wayfair (see our previous blog on the topic), we highlight some related developments in the Mid-Atlantic region. Virginia and Pennsylvania have made changes to their economic nexus rules, effective July 1, 2019.
Under Virginia’s new law, remote sellers must register for collection of Retail Sales and Use Tax if they met one of the following thresholds in either the current or previous calendar year:
- Greater than $100,000 in gross annual revenue from retail sales into VA
- 200 or more transactions to VA customers.
The new thresholds also apply to “marketplace facilitators” – anyone who operates a physical or electronic marketplace to facilitate sales for others (think Amazon).
DC, Maryland, New Jersey and West Virginia have economic nexus provisions and similar thresholds to VA, although with slight differences in application.
Pennsylvania has also issued guidance that is effective July 1, 2019, requiring remote sellers and marketplace facilitators with more than $100,000 in the past 12 months in PA sales to register (note no transaction threshold). This modifies previous law that required sellers with $10,000 or more in PA sales to choose between registering to collect and remit sales tax or comply with notice and reporting requirements. That law remains in effect for merchants with $100,000 or less in PA sales.
New York has a unique threshold: Sellers will be required to register for sales tax if they met both of the following requirements in the immediately preceding 4 quarters:
- Earned gross receipts in excess of $300,000 from sales in the state
- made more than 100 sales into the state
In addition to PA and VA, the other Mid-Atlantic states have also enacted rules for marketplace facilitators, some of which are set to go into effect over the summer.
Delaware does not have a sales tax.
We expect that changes will continue, as states fine tune their new taxing powers. For more information about how the new rules for sales tax may affect your business, please reach out to us at email@example.com or 800.899.3633.
Ophair Silver, CPA is a senior accountant in the tax department at Hertzbach & Company, P.A.