While sales tax collection and filing isn’t an exciting part of running your business, legislative changes in 2019 have made it extremely complex. Marketplace sellers in particular carry the burden of understanding how to navigate these laws and monitoring changes in their business. Learn what the legislative changes in over 40 states means for your business, how to manage sales tax and reporting in Seller Central, and what you can do in 2020 to avoid future sales tax confusion.

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2. ●
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Persephanie Arellano
Webinar Coordinator

3. Matthew Hammond

4. Poll Question
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5. should
Poll Question
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6. 5.
6.

7. Sales taxes are a large part of a
state’s revenues
$13B in uncollected sales tax
revenue from ecommerce
States implementing new laws /
initiatives to collect
○ Economic nexus laws
○ Marketplace fairness laws
○ Use tax reporting laws
Adding new products/ SKUs
New ecommerce, marketplace or other
business applications
Selling into new states
Newly-hired employees
Sales tax audit
Why address sales tax now?
Needier, greedier states Rapid growth triggers tax challenges

8. Sales Tax Overview
Your company is responsible for collecting & remitting sales tax on behalf of it’s
customers for taxable sales.
Over 12,000 taxing jurisdictions in the United States.
Exceptions:
•Product / service-based statutory exemptions.
•Customer-based exemptions (exemption certificates).
•Taxability exemptions vary by state.
Key transaction inputs:
•WHO - Customer (determination of customer-based exemptions).
•WHEN - Invoice date (tax rate determination).
•WHERE - Ship-to, ship-from, order acceptance addresses (taxing authority, or “sourcing”).
•WHAT - Product / service (determination of product-based exemptions).

9. ●South Dakota asked the U.S. Supreme Court to overturn its
long-standing physical presence rule (Quill Corp. v. North
Dakota) for determining when a state can make remote sellers
collect sales tax.
●The Supreme Court ruled in favor of South Dakota on June
21, 2018.
●South Dakota is granted authority to impose sales tax
obligations on out-of-state transactions.
What was South Dakota vs. Wayfair, Inc. about?

10. ●Affected: Remote sellers not currently registered with the state
who meet threshold requirements
○ Annual sales in excess of $100,000 or 200
transactions into South Dakota
●Effective date: November 1, 2018
●Most impactful is that the “physical presence” rule has been
overturned.
South Dakota vs. Wayfair, Inc. ruling details

11. ●If I’m already registered in South Dakota, does this court decision
apply to me?
• This ruling will not affect any company already registered and collecting in South
Dakota.
●Does the ruling only apply to online transactions?
• No. The ruling applies to online and offline sales.
●Does the economic nexus rule apply to non-taxable transactions?
• The ruling does not change what is or isn’t taxable.
South Dakota vs. Wayfair, Inc. ruling details

12. Here’s a look at 2018 & 2019 by the numbers:
• 42 states adopt economic nexus, requiring out-of-state businesses with a certain
amount of economic activity in the state to collect and remit sales tax
• 14 states impose sales tax collection obligations on marketplace providers and
sellers
• 5 states establish use tax reporting requirements for non-collecting sellers
• 2 states adopt affiliate or click-through nexus laws for out-of-state sellers

13. Economic Nexus

14. WHAT IS IT?
ECONOMIC NEXUS
Economic nexus is a tax
collection obligation
imposed on sellers based
on their level of economic
activity within a state.
Unlike physical presence,
it is based entirely on
sales revenue, transaction
volume, or both.
Like most sales tax laws,
economic nexus criteria
vary by state. All aim to
level the playing field
between non-collecting
out-of-state sellers and
brick-and-mortar
businesses.
14

15. Prepare yourself for this new wave of changes
States in action post-ruling Common Question:
What if I’m a seller
based in a country
outside the US, does
this apply to me?

16. What an online seller should consider in
2019

17. ▪ Nexus – where should you be collecting sales tax?
▪ Calculation and Reporting
▪ Product and Service Taxability
▪ Jurisdictional Rate Assignment
▪ Exemption Certificate Management
▪ Sales Tax Returns
What are the elements of your compliance profile?

18. A GROWING LIST
NEXUS-CREATING ACTIVITIES
Affiliates
Trade shows
Commissions to resellers
Investors / board meetings
Marketing / web advertising
Drop shipments
Multistate locations
Maintenance / service / repairs
Owned / leased real property
Hosted data centers
Field sales / service staff
Licenses / royalties / fees
Direct / online sales
Inventory
18

19. What Does This Mean for the Amazon FBA Merchant Seller?
Amazon FBA States
Means state has no sales tax

20. Marketplace Tax Collection
Marketplace Facilitator legislation is currently in effect in the
following states:
STATE EFFECTIVE DATE
Alabama 1/1/2019
Arkansas 7/1/2019
Connecticut 12/1/2018
District of Columbia 4/1/2019
Idaho 6/1/2019
Indiana 7/1/2019
Kentucky 7/1/2019
Iowa 1/1/2019
Minnesota 10/1/2018
Nebraska 4/1/2019
New Jersey 11/1/2018
New Mexico 7/1/2019
New York 6/1/2019
Oklahoma 7/1/2018
“As the marketplace facilitator, Amazon will now be
responsible to calculate, collect, remit, and refund
state sales tax on sales sold by third party sellers for
transactions destined to states where Marketplace
Facilitator and/or Marketplace collection legislation
is enacted. In certain states, local taxes are not
included within Marketplace Facilitator Legislation;
Amazon is not responsible for those taxes.”
Pennsylvania 4/1/2018
Rhode Island 7/1/2019
South Carolina 4/29/2019
South Dakota 3/1/2019
Vermont 6/7/2019
Virginia 7/1/2019
Washington 1/1/2018
West Virginia 7/1/2019
Wyoming 7/1/2019

21. Sales Tax Settings for Seller Central
State Tax Settings Screen. It starts by
showing you all of the states, if any, that you
are collecting taxes for and your settings for
the state - are you collecting in cities and
counties or not? Are you collecting on
shipping, gift wrap, etc.?

22. Adding states & Determine product tax codes
Do you know if
your products are
taxable?
Once you determine
where you have nexus,
you can add the state
here

23. Marketplace Facilitator Reporting

25. Key Takeaways

27. Matthew Hammond
(919) 627-9784
matthew.hammond@avalara.com

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