Let's start with a bit of historical background.
1964: Quill Corp. v. North Dakota.
The court rules that remote sellers who don't have a presence in the state don't need to collect sales taxes.
1992: Quill Corp. v. North Dakota, revisited.
Still no obligation to collect sales taxes if there is no presence.
2015: Direct Marketing Ass'n v. Brohl.
You establish economic nexus if you pass a certain threshold. These qualifications vary from state to state.
What does it mean for you? I will take the example of a company I use to run: IELLO USA.
We had an office in Las Vegas, NV, with employees, an office in Santa Barbara, CA, with employees, and a warehouse in Fort Wayne, IN, where our inventory was stored. We sold at three major conventions: Origins in Columbus, OH, Gen Con in Indianapolis, IN, and PAX Unplugged in Philadelphia, PA. Finally, we sold on our website, www.iellousa.com.
Let's review each state and whether we had to collect sales taxes.
Nevada:
Economic Nexus is established after $100,000 of retail sales or 200 or more separate retail transactions.
Only direct-to-consumer sales are concerned. Not wholesale.
California:
Economic Nexus is established after $500,000 of Gross Sales.
Indiana:
Economic Nexus is established when gross revenue exceeds $100,000 or 200 or more separate transactions.
Our physical presence at Gen Con establishes an economic nexus anyway.
Ohio:
Economic Nexus is established after $500,000 of Gross Sales.
Our physical presence at Origins establishes an economic nexus anyway.
Let's review each state and whether we had to collect sales taxes.
This one is more complex.
Our physical presence at PAX Unplugged establishes an economic nexus anyway.
You can refer to the Sales Tax Institute guide for more details:
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