Close to five years ago, the landmark decision in the Supreme Court case of South Dakota v. Wayfair (2018) changed the sales tax landscape across the country. This decision made it so that states could require companies who met specific sales thresholds to collect and remit tax on sales, even if the company did not have a physical presence in the state. As of today, every state that has sales tax has enacted some sort of economic nexus law, but they have varying transaction threshold requirements, which makes it challenging for online sellers to keep up. As more states, including the state that started it all, jump on the bandwagon, could 2023 be the year transaction thresholds are done away with altogether?

What Are The Challenges Of Current Economic Nexus Threshold Requirements?

There are currently six broad categories of economic nexus thresholds, including:

$100,000 (17 states)
$100,000 or 200 transactions (23 states, Puerto Rico and the District of Columbia)
$100,000 and 100 transactions (one state)
$250,000 (two states)
$500,000 (two states)
$500,000 and 100 transactions (one state)

However, this isn’t where the differences between state economic nexus thresholds end. Some states’ thresholds only include taxable sales of tangible personal property (TPP), while others are based on gross sales. Some state thresholds include services, but they aren’t counted in others. If you sell through a marketplace, that adds another layer of complexity — some thresholds include sales made through a marketplace, but some do not.
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