Small sellers that aren’t required to collect and remit tax under economic nexus laws aren’t necessarily off the hook for sales tax. If they sell through online marketplaces, their sales may be taxed under burgeoning marketplace sales tax laws.
Economic nexus policies have been multiplying like bunnies since the Supreme Court of the United States overruled the physical presence rule that once prevented states from taxing remote sales (South Dakota v. Wayfair, June 21, 2018). A sales tax collection requirement is triggered under economic nexus only after a remote seller meets a certain threshold of economic activity in the state, most commonly $100,000 in gross sales or 200 transactions in the state. Thus, small sellers not meeting one or both thresholds generally aren’t required to collect and remit tax.
However, small retailers that sell through larger marketplaces such as Amazon, eBay, or Etsy do need to worry about another rising tide: taxes targeting marketplace sales.