Update: This article originally stated that new sales tax laws would take effect in seven states. However, a sales tax law in Arkansas that set a Jan. 1 implementation date was introduced, but not passed.
The new year will bring new online sales tax laws in six states: Georgia, Iowa, Louisiana, Nebraska, Utah and West Virginia.
That means, as of Jan. 1, 30 states will have sales tax collection statutes and regulations that require online retailers to collect sales tax on online orders even if they do not have a physical presence in that state. Colorado’s law is also in place, but it will not be enforced until May 31.
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The states’ efforts are a response to the U.S. Supreme Court’s June ruling in the South Dakota v. Wayfair Inc. case that allowed states and local governments to require online retailers to collect sales tax even if they don’t have a physical presence, or nexus, in the state or local tax jurisdiction. Part of the court’s reasoning for overturning decades of precedent was that the South Dakota law is straightforward: The law requires retailers to collect and remit sales tax if they sell more than $100,000 in the state or complete at least 200 transactions with South Dakota residents.
South Dakota—as well as Georgia, Iowa, Nebraska, Utah and West Virginia—are among the 24 states that are part of the Streamlined Sales Tax Governing Board. The group has sought to reduce the online sales tax burden on merchants that include state-level administration of sales and use tax collection, uniformity in state and local tax bases and tax base definitions, and uniform sourcing rules for all taxable transactions.
While Louisiana is not part of the Streamlined Sales Tax Governing Board, it also requires online retailers that do not have a physical presence in the state to collect sales tax if they generate more than $100,000 of gross sales or services and at least 200 transactions annually in the state.
In putting new online sales tax laws into effect, states such as Georgia and Louisiana are reclaiming their authority over sales tax collection, says Jason Brewer, executive vice president, communications and state affairs at the Retail Industry Leaders Association. “States, in their own way, are implementing either via regulation or statute what they need to promote or compel sellers to comply,” he says.