Economic Nexus Thresholds in the U.S.
All NetSuite clients that are remote or online sellers in the United States may need to set up economic nexuses to track sales tax. The laws vary by state and the obligation to charge sales tax is based on specific thresholds for sales revenue, transaction volume, or a combination of those two measurements.
The landmark case of South Dakota v. Wayfair, 2018 WL 3058015 (Sup. Ct. June 21, 2018) led to the passage of an economic nexus law in South Dakota. This now requires out-of-state and online sellers to charge sales tax on any transactions generated from South Dakota. For more information on this case, please click here. Other states also began implementing economic nexus laws that will require online retailers to impose a sales tax, collect, and remit receipts from sales or transactions generated in their states. Some of the other states include South Carolina, Minnesota, Alabama, Mississippi, Georgia, Connecticut, and Tennessee.
Important: Keystone suggests checking with your tax advisers to find out if you need to register the sales tax in a specific state. Your advisers can inform you what the thresholds are, what products are taxable, and how to register.
There are tools available to help determine if you are over the thresholds in any particular state. NetSuite has published an article in SuiteAnswers titled ‘Economic Nexus Thresholds in the U.S.’, ID 79827, that outlines how to create Saved Searches to confirm the sales in a state and the number of transactions.
If you need to register in any new states requiring the economic nexus, you will need to create a tax nexus in NetSuite and set the related NetSuite configuration, including Tax Codes/Groups and Tax Schedules.
Keystone can assist with setting up your tax configuration in NetSuite, if interested.
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