Big Three Wayfair Holdout States Now on Board with Economic Nexus

Latest in Nexus changes

In my last blog, we sounded a general alert on the increasing sales and use tax compliance risk for businesses across the country.  These changes in 2019 were triggered by the Supreme Court’s Wayfair decision in June 2018. With the ruling, the Court expanded the jurisdictional reach of states to impose sales and use tax collection and remittance obligations on businesses.  This reach extended beyond the physical presence of a business within a state to include so-called economic presence (economic nexus). How much economic presence is needed? A business has economic nexus in a state if it meets certain minimum threshold amounts of economic activity. To be more specific, economic activity is measured based on thresholds of sales volume, and/or quantity of transactions within the state. Adding even more complexity, each state varies on their thresholds and nexus definitions.

The Big Three

Before year end, 33 states and DC had adopted economic nexus with various start-collection dates.  Noticeably “absent” in late 2018 had been the states of California, Texas and New York. This changed recently with both California (December 2018) and New York (January 2019) climbing “on board” to new standards.  Similarly, Texas just announced that it will be “on board” before the end of 2019.  However, the “Lone Star” state does not expect to apply the collection start-date retroactively.

New York

New York announced that existing economic nexus provisions became effective June 21, 2018, as a result of the U.S. Supreme Court’s decision in South Dakota v. Wayfair. Due to this ruling, certain existing provisions in the New York tax law that define a sales tax vendor immediately became effective. Businesses that fall within this definition and make taxable sales in New York are required to collect and remit New York state and local sales tax.  A business that has no physical presence in New York but meets specific requirements, in the immediate preceding four sales tax quarters, is required to register and collect/remit sales tax. Those requirements include:

(1) Businesses consummating more than $300,000 in sales of tangible personal property delivered in New York.

(2) Businesses conducting more than 100 sales of tangible personal property delivered in New York.


Beginning April 1, 2019, out-of-state retailers selling above certain thresholds will be required to collect California use taxes on their sales into California. Furthermore, for out-of-state retailers, the new collection requirement applies if during the preceding or current calendar year:

(1) The retailer’s sales for delivery into California exceed $100,000.

(2) The retailer makes sales for delivery into California in 200 or more separate transactions.

This new use tax collection requirement is not retroactive and applies only to sales made on and after April 1, 2019.


Remote sellers may have to begin collecting sales tax on their sales into Texas in late 2019.  Texas has announced plans to adopt new rules for remote sellers in early 2019. Retroactive enforcement of these new rules is expected. The anticipated time frame for collection requirements is sometime in late 2019.

Stay up to date with all of the nexus standards across the country.

Visit the Wolters Kluwer | Sales Tax Nexus resource page to stay current with rapidly changing nexus standards across the country.


Jerome Nestor

Jerome Nestor, Esq., CPA, MBA-Accounting Information Systems Manager Tax & Accounting North America Wolters Kluwer Mobile: +1 847.312.5671 Email:

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