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Thursday, January 2, 2020

Avalara Navigates 2020 Sales Tax Changes

New collection requirements for marketplaces take effect in Hawaii, Illinois, Michigan, and Wisconsin on January 1, 2020, at which point marketplace facilitator laws will be enforced in a whopping 39 states (including Washington, D.C.).

Collection requirements for marketplace facilitators generally apply to marketplaces with either a physical presence in the state or substantial sales into the state (economic nexus). Since most state economic nexus laws allow an exception for small sellers, remote marketplaces need to determine whether they’ve crossed the economic nexus threshold; in most cases, marketplaces must include both direct and third-party sales when calculating the threshold in a state.

Not having to collect and remit sales tax certainly facilitates compliance for marketplace sellers. However, they aren’t necessarily relieved of their duty to register with the tax department or file returns just because facilitators collect and remit the tax on their behalf. Registration and reporting requirements for marketplace sellers vary by state, by the seller’s method of sales, and whether the seller has a physical presence in the state or economic nexus. Like marketplace facilitators, marketplace sellers must determine whether they’ve crossed the economic nexus threshold — though state laws are more varied when it comes to whether marketplace sellers should include marketplace sales as well as direct sales when calculating the threshold.

To learn more about registration requirements for marketplace sellers in all states, including the four newbies (Hawaii, Illinois, Michigan, and Wisconsin) visit Avalara’s state-by-state guide to registration requirements for marketplace sellers.

Concerned about sales tax? Let Avalara handle yours, and get more accurate bookkeeping in the process. Avalara can automate sales tax rates, prep, filing, and payment. Visit the Avalara website to learn more.

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