Sales Tax Nexus and Marketplace Facilitators

by Robert Banagay, Partner at TTCG

Since July 1st, 2020, marketplace facilitators in Mississippi have been required to collect and remit sales tax for sales exceeding $250,000 during any consecutive 12-month period. 

Sales tax on e-commerce transactions is a hot topic right now with more than 80 percent of the United States having established a nexus for those doing online sales out-of-state. 

In 2018, the United States Supreme Court ruled 5-4 in South Dakota v. Wayfair that states can mandate that businesses without a physical presence in a state, but with more than 200 transactions or $100,000 in in-state sales per year, collect and remit sales taxes on taxable transactions in the state. This means such businesses have “nexus” in those states.

While there has been a slow but steady increase in e-commerce sales over the last five years, the COVID-19 pandemic led to a 14.9 percent increase in online sales in just a few months.  

The other side of that coin is that states are seeing a marked decline in sales tax because those sales no longer occur in a store. To make up for that decline, states are looking at new and different ways to collect sales tax for online sales. Enter the rising interest in the South Dakota v. Wayfair ruling that has now impacted even small businesses. 

While states have attempted to compel businesses to do this for several years via different economic nexus rules, Wayfair set a threshold that is fast becoming the law of the land and an increasing number of states are implementing similar laws.

As more businesses move to online servicing and marketplace facilitators to continue their operations, this state-by-state sales tax nexus information is vital.

The recent boom in online sales means that many businesses that previously had no nexus in other states are burdened with a complex sales tax responsibility. TTR can help them find answers and get tax right.

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Robert Banagay heads up the consulting team at TTR, a subscription-based website that provides sales, use, and transaction tax answers and tax rates to thousands of companies worldwide. He specializes in all aspects of state tax compliance, including nexus reviews and audits. https://www.ttrus.com

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