Economic Nexus - Are you Gambling?

Now that Wayfair is a reality it is time for companies that have sales into more than one state to consider the implications. Historically the lack of any physical activity created a barrier to required compliance for sales tax and other similar transactional taxes. But that barrier is now gone.

And it has been replaced in many states with nexus causing thresholds that businesses are often going to qualify under. Those thresholds revolve around dollar values of sales and/or quantity of customers. There are already states that require businesses to file, effective July 1, 2018, if they have annual sales to that state of $100,000 or more. Others have thresholds of 100 or 200 customers. More are following this path, and by the beginning of next year there are 16 states with requirements (some of which are being challenged still) to file at some level of either revenue or sales.

I recommend any company that has sales that are to end-users consult with their tax advisor immediately to gauge the risk of any non-compliance. Since the requirement to file began already, you may already be incurring liabilities for unpaid taxes, penalties and interest, and are now gambling whether an audit will find them.