Sales tax: States changing economic nexus thresholds

Though it’s been three years since states gained the ability to tax online sales, some are still toying with their economic nexus thresholds.

The latest state to do so: Maine. As of now, remote sellers must collect sales tax if they make at least $100,000 in sales or 200 separate transactions in the Pine Tree State each year.

But beginning Jan. 1, 2022, Maine is dropping the transaction threshold completely. Only remote sellers and marketplace facilitators making $100,000 in sales annually will have to collect sales tax here.

An effort to simplify

This has been a recent trend in the sales and use tax space. Several states that originally had a two-part threshold (a “sales” threshold and a “transaction” threshold) have since decided to simplify things.

For example, Wisconsin also amended its economic nexus threshold recently. It was originally $100,000 in sales or 200 transactions, but as of Feb. 20, 2021, it’s only $100,000 in sales.

As a quick reminder for your team, other states that have changed their economic nexus thresholds include:

• California: $100,000 in sales or 200 transactions originally; $500,000 in sales as of April 1, 2019
• Colorado: $100,000 in sales or 200 transactions originally; only $100,000 in sales as of April 1, 2019
• Iowa: $100,000 in sales or 200 transactions originally; only $100,000 in sales as of July 1, 2019
• Massachusetts: $500,000 in sales and 100 transactions originally, with the “cookie nexus” rule; only $100,000 in sales as of Oct. 1, 2019, with the economic nexus rule
• North Dakota: $100,000 in sales or 200 transactions originally; only $100,000 in sales as of Jan. 1, 2019, and
• Washington: $100,000 in sales or 200 transactions originally; only $100,000 in sales as of March 15, 2019.

Of course, any time states make changes to their economic nexus rules, A/R and A/P need to know about it.

You’ll want to alert your staffers to these economic nexus threshold changes – and the likelihood that other states will jump to join the trend. That way, your staffers are vigilant for more changes, and they don’t apply or pay sales tax when it’s no longer necessary.

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