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Q1 2019 Updates For Economic Nexus Thresholds On Remote Sellers For Sales and Use Taxes


Virginia recently adopted economic nexus thresholds for sales and use tax collection purposes, while North Dakota and Washington amended their existing rules.  Virginia adopted South Dakota’s thresholds of $100,000 or 200 transactions, which were the subject of the U.S. Supreme Court’s Wayfair decision.  North Dakota and Washington amended their statutes to remove the 200-separate-transactions test.  Other states simply codified their existing regulations or administrative guidance.



On March 26, 2019, Virginia enacted H.B. 1722.  Effective July 1, 2019, the new law requires remote sellers to register and collect sales tax if they exceed Virginia’s economic thresholds.  It amends the definition of a “dealer,” under Code of Virginia Section 58.1-612(C).  Beginning on July 1, 2019, a remote seller will be required to register and collect sales tax if it meets either of the following two tests:

  • If the seller receives more than $100,000 in gross revenue from retail sales in Virginia in the previous or current calendar year.
  • If the seller engages in 200 or more separate retail sales transactions in Virginia in the previous or current calendar year. 


Unlike other states, Virginia included an aggregation method in calculating whether the remote seller exceeds the threshold.  In determining the amount of gross receipts or the total number of retail sales transactions, the sales made by all “commonly controlled persons” must be aggregated.  Code of Virginia Section 58.1-612(D) defines a “commonly controlled person” as any person that is a member of the same controlled group of corporations, as defined under IRC Section 1563(a).  This is a major difference from other states.
The law also established the same economic nexus thresholds for “marketplace facilitators” and “marketplace sellers.”  Under the new law, a marketplace facilitator is the dealer that is required to collect the sales tax, while marketplace sellers are relieved of collection duties.  However, the marketplace facilitator may obtain a waiver from the Virginia Department of Taxation by showing that all of its marketplace sellers are properly registered and collecting sales and use taxes.  If the marketplace facilitator obtains a waiver, then it will be relieved from collecting sales tax on behalf of its marketplace sellers.
North Dakota – 200 Separate Transaction Test Eliminated

On March 6, 2019, North Dakota enacted S.B. 2191, effective for tax years beginning after December 31, 2018.  The bill amends N.D. Cent. Code Section 57-39.2-02.2 by removing the test of whether a seller sold tangible personal property (TPP) in more than 200 separate transactions.  The only test that remains is whether the seller’s gross sales from the sale of TPP and other taxable items delivered into North Dakota exceed $100,000 in the previous calendar year, or the current calendar year.
The $100,000-only threshold under S.B. 2191 is effective beginning January 1, 2019.  Consequently, if a remote seller exceeded the 200-separate-transactions test under the previous law, which was effective from October 1, 2018, through December 31, 2018, then it would still have established economic nexus for that period.
Washington – 200 Separate Transaction Test Eliminated

Similarly, on March 14, 2019, Washington enacted S.B. 5581.  The bill became effective the same day.  Like North Dakota, Washington’s bill eliminated the 200-transactions test from its economic nexus provisions.  Effective March 14, 2019, through December 31, 2019, a “remote seller” is relieved of its collection responsibilities if the obligation arose solely from exceeding the 200-transactions test.  Effective January 1, 2020, the only bright-line economic nexus test that remains when calculating “substantial nexus” for “sellers” is whether the business has more than $100,000 of cumulative gross receipts in Washington.
Also, like North Dakota, if a remote seller exceeded the 200-transactions test under the previous law, which was effective from October 1, 2018, through March 14, 2019, then that remote seller may still have established economic nexus for that period.
Apart from amending its “substantial nexus” thresholds, the bill also did the following:

  • Eliminated click-through nexus. 
  • Beginning on July 1, 2019, the bill also eliminates the notice and reporting requirements that were created under the 2017 marketplace fairness laws. 
  • The definition of “seller” was amended to include “marketplace facilitators” and “marketplace sellers.” 
  • When calculating whether a marketplace facilitator meets the $100,000 gross receipts threshold, the marketplace facilitator must include its own receipts, as well as gross receipts from all marketplace sellers through the marketplace facilitator’s marketplace.
  • Beginning on October 1, 2018, marketplace facilitators must collect and remit sales tax if they exceed the economic nexus thresholds, regardless of whether the marketplace seller also has a collection responsibility.  And, beginning January 1, 2020, the collection obligations of marketplace facilitators also applies to other taxes and fees imposed on a retail sale made or facilitated by the marketplace facilitator.
  • Finally, beginning on January 1, 2020, the bill also amended the economic nexus threshold for the B&O tax by lowering it from $267,000 to match that of sales tax at $100,000 gross receipts.  The bill also eliminated the property and payroll factors for purposes of B&O tax apportionment. 


Other States’ Legislative Updates Related to Economic Nexus for Remote Sellers

  • Nebraska – On March 21, 2019, Nebraska enacted Legislative Bill 284, which codified its economic nexus thresholds for remote sellers of $100,000 or 200 separate transactions.  Nebraska’s registration and collection responsibilities are effective April 1, 2019.
  • North Carolina – On March 20, 2019, North Carolina enacted S.B. No. 56, which codified its remote seller thresholds of $100,000 or 200 transactions, as established in Directive No. SD-18-6.
  • Kansas – On March 25, 2019, Governor Kelly vetoed S.B. 22, which would have adopted economic nexus thresholds for remote sellers, among other things.
  • Rhode Island – On March 29, 2019, Rhode Island enacted S.B. 251 Sub A, which updated its economic nexus laws to include “marketplace facilitators,” with thresholds of $100,000 or 200 separate transactions.  It also eliminates the option of remote sellers to comply with notice and reporting requirements, in lieu of sales tax collection. 



  • The thresholds discussed in this article only apply to remote sellers that do not have physical presence in that state.  If the seller had physical presence in a state before exceeding that state’s economic nexus rule, the seller may still have nexus for sales tax purposes.  In that scenario, the seller should perform an exposure analysis and consider mitigation strategies, such as voluntary disclosure agreements or amnesty programs.
  • In states like North Dakota and Washington that eliminated their 200-transactions test in 2019, be aware that for previous periods, a remote seller may have met the states’ economic nexus thresholds by exceeding 200 transactions.  The previous law that has now been amended is still effective and applicable to those prior periods.  And, establishing nexus in 2018 could potentially create a trailing nexus issue for a remote seller in 2019, even if that seller does not otherwise meet the $100,000 threshold.
  • Various other states have proposed legislation to adopt (e.g., Idaho), codify administrative guidance, or modify, economic nexus thresholds for remote sellers.  For example, Oklahoma introduced a bill that would increase its threshold from $10,000 to $100,000, while Georgia introduced a bill that would lower its threshold from $250,000 to $100,000.  There has also been a trend by state legislatures to introduce bills related to marketplace facilitators.