The Supreme Court’s 2018 ruling in the South Dakota vs Wayfair case dramatically changed the sales tax nexus landscape, allowing states to establish or enforce laws requiring remote sellers to charge and remit sales tax on purchases sold or delivered in the state. In 2021, Kansas and Missouri, the only two states not to have enacted laws requiring remote sellers to collect and remit sales tax purchases, finally did so.
Kansas (Effective July 1, 2021)
Kansas Senate Bill 50 took effect July 1, 2021. It enacted remote seller and marketplace facilitator rules, mirroring the activity by almost every other “sales tax” state in the country.
It also clarified the disconnect between the Kansas Department of Revenue and the Kansas Attorney General on the state’s remote seller nexus position.
Economic Nexus Threshold
In Kansas, retailers that have in excess of $100,000 of cumulative gross receipts from Kansas customers in the current or immediately preceding calendar year are considered a “retailer doing business in this state,” and are subject to a requirement to register in the state and to collect and remit sales tax. Any retailer that meets the requirement of having in excess of $100,000 cumulative gross receipts in the current calendar year for the first time is only required to collect and remit taxes on sales exceeding $100,000; thus, it is not responsible for collecting and remitting tax on sales below the $100,000 threshold.
Marketplace Facilitator Provisions
A marketplace facilitator is required to collect and remit tax if it makes or facilitates the sale of property or services subject to tax in the state, on its own behalf or on behalf of its marketplace sellers, for delivery into Kansas in an amount exceeding $100,000.
While Kansas’s definition of “marketplace facilitator” is typical, Kansas Senate Bill 50 specifically includes persons that provide a marketplace for unaffiliated third parties to rent or provide lodgings or accommodations in a home, apartment, cabin or other residential dwelling, but only for short-term rentals (defined as fewer than 29 consecutive days). However, if the accommodations are provided by a hotel that is operating under a person’s brand, then the person is not considered a marketplace facilitator.
In Kansas, the definition of “marketplace facilitator” specifically excludes:
• a platform that exclusively provides advertising services,
• a person whose principal activity with respect to marketplace sales is to provide payment processing services between two parties,
• and other financial transactions markets.
The legislation allows the Kansas Department of Revenue to grant a waiver from the marketplace requirements if the marketplace facilitator can satisfactorily demonstrate that substantially all its marketplace sellers already are collecting and remitting taxes. If the department grants the waiver, then the taxes are collectible from the marketplace seller. The bill requires the department to promulgate rules to administer this waiver process.
The new legislation includes a welcome provision that most states have not included in their marketplace regimes. In Kansas, the marketplace facilitator can be relieved of liability if it can prove, to the department’s satisfaction, that the tax on a sale facilitated by the marketplace facilitator was paid by the marketplace seller.
Missouri (Effective January 1, 2023)
On June 30, 2021, Missouri’s SB 153 and 97 were enacted, allowing state and local jurisdictions to collect a use tax from online retailers who sell and deliver more than $100,000 annually in tangible goods to consumers in the state each year. Although some of the details of Missouri’s law are similar to other states, it’s important to note that the state’s economic nexus law does not have a threshold on minimum number of sales for the compliance requirements to apply. Instead, it is dependent on the taxable receipts threshold only. Once that threshold is reached, retailers are expected to register to collect and remit tax immediately.
Missouri’s collection and remittance requirements begin January 1, 2023 and requires online marketplace facilitators to collect Missouri’s taxes on sales made through their sites beginning on that date. With its 2023 effective date, Missouri will be the final state to implement an economic nexus law since the Supreme Court’s decision in 2018.
The Synexus team is available to work with you and your business to understand the nexus developments and the effect legislation can have on your business. If you have any questions regarding the recently enacted legislation in Kansas or Missouri please contact a member of our team by completing the form below.
