Etsy hosted a discussion board chat to answer sellers’ questions about online sales tax. It provided some background, explaining that since the Supreme Court ruling this year in South Dakota v. Wayfair, sellers must now concern themselves with economic nexus, not just physical nexus, when determining whether they need to collect tax on purchase made by out-of-state customers.
“For example,” Etsy wrote, “Wisconsin’s new rule says that out-of-state sellers who make more than $100,000 in sales or 200 transactions into Wisconsin in a 12-month period would need to start collecting and remitting state sales tax from their customers and pay it to the state.”
Remember, Etsy doesn’t know if sellers on its platform are using other channels to sell, so it doesn’t know if an individual seller meets a particular state’s threshold for collecting sales tax.
Etsy pointed to a chart published by the Sales Tax Institute that contains a list of the states that have passed economic nexus laws since the Supreme Court’s ruling.
Etsy also advised international sellers: “If you run your business from outside the US, you may still be required to collect and remit state sales tax to some states if your sales into the state pass the threshold set by the state. If you think you might meet a state’s threshold or have an further questions, consider consulting a local tax advisor.”
The issue is even more complex since some states have passed marketplace facilitator laws. As Etsy explains, “Marketplace tax laws, like those in Pennsylvania and Washington, require marketplaces such as Etsy to collect and remit sales tax on orders shipped to addresses in those states on the seller’s behalf.”
You can peruse the questions sellers asked along with Etsy’s response on this thread where it tries to help sellers navigate confusing and complex territory.
Etsy is also urging sellers to help it advocate for a simpler solution. “You can help our advocacy efforts by writing to your Member of Congress today, asking them to support a new bill that protects businesses like yours from these new laws.”