Sales Tax Legislation in Wyoming and Utah – Has Nexus Reached Its Tipping Point?

This blog was last updated on June 26, 2021

Proposed bills and rules around nexus are being discussed and debated in state capitals across the country. The evolution of ecommerce continues to place pressure on the nexus standard. As states search for avenues to collect and remit tax, businesses face expanded sales tax compliance responsibilities. With recent proposed legislation, both Utah and Wyoming took steps to join Alabama, South Dakota, Vermont, Tennessee and others in requiring out-of-state sellers to collect and remit sales tax regardless of whether they have a physical presence in that state. Utah Senate Bill 110 requires remote sellers lacking physical presence, but which have an economic presence in Utah, to pay or collect and remit sales and use tax when revenue from sales of tangible personal property, products transferred electronically, or services exceed $100,000. Similarly, Wyoming House Bill 19 requires retailers without physical presence to pay or collect and remit sales and use tax when gross revenue exceeds $100,000 or when 200 or more separate sales transactions occur within Wyoming. While nothing is certain in the world of politics, the expectation is that both bills will ultimately be signed into law. As was the case with prior states, these bills raise concerns under the Commerce Clause of the Constitution. Federally, Quill Corp. v. North Dakota is the law of the land – which asserts states may not require a seller to pay or collect and remit sales and use tax unless the seller has a “substantial nexus” with the taxing state. The Court also found that substantial nexus is only satisfied when the seller has a physical presence in the state; mere contact by mail or common carrier is not enough. Similar proposed bills and rules are being discussed and debated in state capitals across the country. While enforcement of these measures are frequently stayed pending the outcome of litigation, we’ve reached a tipping point in this country with remote sellers nexus.