West Virginia Provides Notice About Impending Economic Nexus Thresholds
In response to the recent U.S. Supreme Court Wayfair ruling, the West Virginia Tax Department issued an Administrative Notice (“Notice”) that will affect remote sellers prospectively. Beginning January 1, 2019, certain remote sellers will be required to collect and remit West Virginia sales and use taxes on taxable sales delivered into the state.
In Wayfair, the Supreme Court held that physical presence is not necessary to create substantial nexus with a state. The Court held that there was sufficient nexus, despite a lack of physical presence, due to the significant quantity of business that was being conducted in the state. Therefore, the Court decided that South Dakota may require remote sellers to collect and remit the sales tax even when the remote seller only makes sales to its residents. Subsequent to this decision, West Virginia and several states have begun establishing similar economic nexus thresholds to obligate remote sellers to collect and remit sales tax.
The new collection requirement applies to remote sellers that currently do not collect West Virginia sales and use taxes, but during the 2018 calendar year either (1) delivered more than $100,000 of goods or services into West Virginia; or (2) engaged in 200 or more separate transactions for the delivery of goods and services into the state. Please note, moving forward for any remote seller that may not have satisfied either threshold in 2018, the requirement will be imposed for a given calendar year based on that seller’s satisfaction of either threshold in the immediately preceding calendar year.
Small remote sellers are afforded an exception from collecting state and municipal sales and use taxes if (1) they do not have any physical presence in West Virginia, (2) their annual sales of products are no more than $100,000 and (3) they make less than 200 annual, separate transactions for goods and services.
Remote sellers who conduct business in West Virginia may be affected by this new requirement once it is implemented. West Virginia also allows for those who are interested to voluntarily register with the state to collect state sales and use taxes. Remote sellers may register online at Business for West Virginia or by using the Streamlined Sales Tax Registration System. A qualified tax attorney can assist with the execution of the application and potential questions or concerns that may arise in the process.
Gerald “Jerry” Donnini II is a shareholder of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of state and Federal tax matters, with a heavy emphasis on the tobacco, alcohol, motor fuel and related industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com. For more information please call us at 888-966-8216.