US Sales & Use tax
USA – second biggest online marketplace in the world
The USA is the second biggest online marketplace in the world. With a 2020 projected revenue in the eCommerce market of US$410,891m and expected to grow up to US$523,677m by 2024, online sellers should consider entering the US market.
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Introducing Marketplace Tax Collection in the USA
Depending which marketplace platform online sellers are using, it is important to know if they are considered a “Marketplace Facilitator”.
For example, Amazon enters in the Marketplace facilitator definition, as a result, the obligation for sales tax collection and remittance shifts from the seller to Amazon.
At the moment, marketplaces such as Amazon, Etsy, Walmart, Rakuten and eBay, are required to collect sales taxes in 45 states.
For those marketplaces that are not considered Marketplaces Facilitators, like a Shopify websites, accounting and filing sales taxes returns is still the sellers obligation.
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Physical nexus for online sellers
Sales Tax must be charged when a nexus (or connection) between a business and a state exists. Traditionally, a nexus occurs when there is physical presence in a state, such a store or employees, but since June 2018, a new rule was enforced and now online sellers with out a physical presence in any state will need to collect Sales Tax based on the volume or value of transaction within a state.
Registering for sales tax
With so many states having their own set of rules, and with the obligation to register in every states where an economic nexus exists, sales tax registration can be difficult to cope with. To make it even more complicated, selling on both Amazon and Shopify for example, will create the need to only report sales coming from Shopify but not Amazon’s.
The best recommendation is to consult with US state tax authorities or a tax professional. GVC is well equipped to assist you monitoring your sales and apply for a sales tax registration when required. Do not hesitate to contact our tax experts.
Sales tax filing
Sales tax return filing frequencies can vary depending on each state requirements and can go from annually, semi-annually, quarterly, monthly, semi-monthly to monthly. Filing frequency is commonly based on the taxpayer’s sales volume and the amount of tax that the taxpayer collects during the period.
| STATE | EFFECTIVE DATE | ANNUAL ECONOMIC THRESHOLD | ANNUAL TRANSACTION THRESHOLD |
| Alabama | 01 October 2018 | 250,000 | N/A |
| Alaska | 100,000 | 200 | |
| Arizona | 30 September 2019 | 150,000 | N/A |
| Arkansas | 01 July 2019 | 100,000 | 200 |
| California | 01 April 2019 | 500,000 | N/A |
| Colorado | 01 June 2019 | 100,000 | N/A |
| Connecticut | 01 December 2018 | 100,000 | 200 |
| Florida | 01 July 2021 | 100,000 | N/A |
| Georgia | 01 January 2019 | 250,000 | 200 |
| Hawaii | 01 July 2018 | 100,000 | 200 |
| Idaho | 01 June 2019 | 100,000 | N/A |
| Illinois | 01 October 2018 | 100,000 | 200 |
| Indiana | 01 October 2018 | 100,000 | 200 |
| Iowa | 01 January 2019 | 100,000 | 200 |
| Kansas | 01 October 2018 | N/A | N/A |
| Kentucky | 01 July 2018 | 100,000 | 200 |
| Louisiana | 01 January 2019 | 100,000 | 200 |
| Maine | 01 July 2018 | 100,000 | 200 |
| Maryland | 01 October 2018 | 100,000 | 200 |
| Massachusetts | 01 October 2017 | 100,000 | – |
| Michigan | 01 October 2018 | 100,000 | 200 |
| Minnesota | 01 October 2018 | 100,000 | 200 |
| Mississippi | 01 September 2018 | 250,000 | – |
| Missouri | – | – | – |
| Montana | – | – | – |
| Nebraska | 01 January 2019 | 100,000 | 200 |
| Nevada | 01 October 2018 | 100,000 | 200 |
| New Hampshire | – | – | – |
| New Jersey | 01 November 2018 | 100,000 | 200 |
| New Mexico | 01 July 2018 | 100,000 | N/A |
| New York | 21 June 2018 | 500,000 | 100 |
| North Carolina | 01 November 2018 | 100,000 | 200 |
| North Dakota | 01 January 2019 | 100,000 | N/A |
| Ohio | 01 August 2019 | 100,000 | 200 |
| Oklahoma | 01 July 2018 | 10,000 | N/A |
| Oregon | – | – | – |
| Pennsylvania | 01 July 2018 | 100,000 | N/A |
| Rhode Island | 07 July 2019 | 100,000 | 200 |
| South Carolina | 01 November 2018 | 100,000 | N/A |
| South Dakota | 21 June 2017 | 100,000 | 200 |
| Tennessee | 01 October 2018 | 500,000 | N/A |
| Texas | 01 October 2019 | 500,000 | N/A |
| Utah | 01 January 2019 | 100,000 | 200 |
| Vermont | 01 July 2018 | 100,000 | 200 |
| Virginia | 01 July 2019 | 100,000 | 200 |
| Washington | 01 October 2018 | 100,000 | N/A |
| Washington DC | 01 January 2019 | 100,000 | 200 |
| West Virginia | 01 January 2019 | 100,000 | 200 |
| Wisconsin | 01 October 2018 | 100,000 | 200 |
| Wyoming | 01 February 2019 | 100,000 | 200 |
Source credit: taxconnex
*The above information is only indicative. This table is updated regularly but please contact GVC in order to ensure that it is correct at the date you are using it.