Kansas and Florida to tax online remote sellers

| 5/20/2021
Kansas and Florida to tax online remote sellers

The South Dakota v. Wayfair decision opened the door for states to tax online remote sellers. With Kansas and Florida getting on board, Missouri now is the only state not to have enacted Wayfair rules for remote sellers. However, sellers should continue to monitor their Missouri activities as the Missouri legislature recently passed Senate Bill 153, which, if approved, would mean Missouri similarly will confer Wayfair sales tax nexus upon remote sellers.

Kansas

Kansas recently passed Senate Bill 50 (SB 50), under which it will begin collecting sales tax from online remote sellers on July 1, 2021, after a false start in 2019. On Aug. 1, 2019, the Kansas Department of Revenue issued Notice 19-04, which permitted Kansas to confer sales tax nexus upon remote sellers irrespective of sales volume. One day before Kansas Notice 19-04 was to take effect on Oct. 1, 2019, the Kansas attorney general’s office announced that it would not enforce challenges to Kansas Notice 19-04 and noted that “K.S.A. 79-3702(h)(1)(F), as described in Notice 19-04, is of no force or legal effect because it was not lawfully adopted in compliance with Kansas law.”

It is against this background – one that has had remote taxpayers in limbo for almost 20 months – that on May 3, 2021, the legislature overrode the governor’s veto of Kansas SB 50. SB 50 conforms with the traditional Wayfair thresholds by providing a safe harbor for remote sellers as well as retroactive protections that safeguard a taxpayer from being “required to collect and remit any taxes from sales occurring prior to July 1, 2021.”

Effective July 1, Kansas will require remote sellers with no physical presence in Kansas to register for sales tax if they satisfy either of the following thresholds:

  • Having more than $100,000 of cumulative gross receipts from sales to customers in the state for the period of Jan. 1, 2021, through June 30, 2021
  • Having more than $100,000 of cumulative gross receipts from sales to customers in the state during the current or immediately preceding calendar year

The legislation includes a provision that precludes retroactive enforcement for remote sellers. Taxpayers are required to register once either of the above criteria is satisfied.

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Florida

Effective July 1, Florida will require remote sellers with no physical presence in Florida to collect sales tax on taxable remote sales to purchasers in Florida if taxable sales exceed the $100,000 threshold in the previous calendar year. Remote sellers and marketplace facilitators that have met the Florida sales threshold are required to register by Oct. 1, 2021. If they do not comply with this registration requirement, they could be subject to tax, penalties, and interest for remote sales prior to July 1, 2021.

Next steps

Remote sellers should review their remote sales in Florida and Kansas for the applicable prior periods to determine if they meet the online remote nexus thresholds. Sellers that meet the threshold are required to register with the appropriate state and collect and pay sales and use tax. Sellers that meet the threshold for Florida over the previous calendar year are required to file a Florida Business Tax Application by Oct. 1, 2021.

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Daniel Megathlin
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Marc Grossman
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Martin Joseph
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