In light of the U.S. Supreme Court decision in South Dakota v. Wayfair, Inc., Dkt. 17–494, June 21, 2018, certain remote sellers are required to collect and remit West Virginia sales and use taxes on taxable sales delivered in West Virginia, beginning January 1, 2019. The West Virginia State Tax Department has posted information about the new economic nexus requirements on its website.
In Wayfair, the Supreme Court held that physical presence is not necessary to create substantial nexus with a state. The Court found that large, national companies with an extensive virtual presence in South Dakota are engaging in a “significant quantity of business.” The Court decided that South Dakota may require remote sellers to collect and remit the sales tax when all the remote seller does in South Dakota is make sales to its residents. In making its decision on the presence required in a state to create sales tax nexus, the Court overruled U.S. Supreme Court precedent, including Quill v. North Dakota.
Remote Sellers With Economic Nexus Required to Report
Out-of-state vendors with a physical presence in West Virginia are already required to collect and remit state and municipal sales and use taxes. Additionally, some out-of-state vendors without a physical presence in the state are voluntarily collecting and remitting these taxes.
As a result of the Wayfair decision, on and after January 1, 2019, remote sellers are required to collect state and municipal sales and use taxes on sales delivered in West Virginia unless the small-seller exception applies. “Remote seller” means a person selling tangible personal property and/or services for delivery in the state who does not have a physical presence in West Virginia and who has not voluntarily agreed to collect state sales and use taxes. The new collection requirement applies to out-of-state vendors that currently do not collect the taxes, but during calendar year 2018 either:
– delivered more than $100,000 of goods or services into West Virginia; or
– engaged in 200 or more separate transactions for the delivery of goods and services into West Virginia.
The requirement will be imposed for a given calendar year based on the vendor’s attainment of either of the stated thresholds in the immediately preceding calendar year.
What is the Small Seller Exception?
Small remote sellers that have no physical presence in West Virginia will not be required to collect state and municipal sales and use taxes when the remote seller has annual sales of products and services of:
– no more than $100,000; and
– less than 200 separate transactions for goods and services delivered in West Virginia.
Retailers should note that the small-seller exception does not apply to sellers with a physical presence in West Virginia, or to sellers that volunteer to collect West Virginia taxes.
State Tax Department Information
The State Tax Department’s website has been updated to include information on the new remote seller requirements, and can be viewed at https://tax.wv.gov. The website includes questions and answers on requirements, registration, audits, and other relevant topics.
Administrative Notice 2018-18, West Virginia State Tax Department, October 1, 2018, ¶401-346; Remote Sellers and West Virginia Sales and Use Tax, West Virginia State Tax Department, October 2018