Barbara Weltman is President of Big Ideas for Small Business, Inc., a source for tax, legal, and financial information specially developed for small businesses and independent entrepreneurs and is author of J.K. Lasser’s Small Business Taxes 2019 and Tweeter Extraordinaire. She discusses new sales tax obligations for merchants in Part 2 of EcommerceBytes Online Selling Trends 2019.
Taxes are always changing, and usually are a trending issue. Last year, the key focus for taxes was the new rules created by the Tax Cuts and Jobs Act, including the new 20% qualified business income deduction for owners of pass-through entities.
This year, it’s likely to be sales taxes. In the wake of last year’s Supreme Court decision year in South Dakota v. Wayfair, Inc., states are now free to impose sales tax on remote sellers. That decision said it’s permissible for a state to require a remote seller to collect and remit sales tax on transactions involving its residents. Some states began to enforce their sales tax obligations on remote sellers in 2018. But more states, including Georgia, Louisiana, and Nebraska, didn’t start this until January 1, 2019. Tennessee and Wyoming haven’t set a date yet. And Florida, New Mexico, and the District of Columbia haven’t weighed in on collections for remote sellers, but are expected to do so this year.
Check to see the “small seller” definition in each state in which you sell goods or services to see whether you are exempt from sales tax rules for remoter sellers. Most states have adopted the exception approved by the Supreme Court – no more than $100,000 in gross revenue or 200 transactions within the state – but there are some variations. And watch out for possible retroactivity of these sale tax obligations (although the Court indicated this wasn’t a good thing).
Introduction to Online Selling Trends 2019: Back to Basics
1) Diversification and Expansion Beyond Marketplaces
2) New Sales Tax Obligations
3) An Increase in Returns Combined with High Demand for Used Goods
4) Major Changes in USPS Rate Structure, Adoption of Voice Technology
5) Retail Convergence Accompanied by Tax Complexities
6) Increasing Cost and Complexity of Parcel Shipping
7) “Glass Box” in Artificial Intelligence, In-Store Personalization
8) Continued Dominance of Ecommerce by Amazon