Retailers who make sales into other states, but do NOT collect and remit sales tax due to lack of nexus, are now required to comply with reporting requirements in numerous states. Not only are states attempting to increase sales tax revenue, but they are hoping retailers will voluntarily opt for collection and remittance of sales tax rather than comply with the new reporting requirements. These reporting requirements include:

  • Notification of purchaser’s use tax responsibility on invoices and websites.
  • Annual customer notifications listing purchases made for which the customer owes use tax.
  • Annual reporting to the respective State Department of Revenue enumerating names and amounts of sales made to purchasers for whom they did not collect sales tax.

The attached chart attempts to summarize available information regarding the states’ notification requirements, the thresholds at which the notification laws take effect, penalties imposed and references for additional information including specific information/language required by each state.

Good News:   

  • Most of these states have thresholds that have to be exceeded before compliance is required.

Bad News: 

  • The penalties for non-compliance can be substantial and there’s little/no consistency among the states.
  • The due date for required state reporting for Colorado and Louisiana is March 1st, 2018.
  • Numerous other states have pending legislation and are expected to follow.

These laws have been challenged all the way to the Supreme Court and held as Constitutional.

We are monitoring the tax rules and regulations as they come. Please contact your Somerset advisor at 317-472-2200 or  with any questions.