Wayfair and Nexus: The Aftermath – Part 4

May 31, 2019

As states continue to issue guidance on their Wayfair rules, we are beginning to see the slight differences among them that will add to the complexity and cost of compliance. In addition, Hawaii is the first state to enact a Wayfair rule for income tax nexus.

This article summarizes recent post-Wayfair activity in Wisconsin, California, Georgia and Hawaii.


In the April 2019 edition of our SALT Newsletter, we wrote an article that summarized an Indiana ruling on the state’s sales tax economic nexus rule following South Dakota v. Wayfair. In short, the ruling stated that the out-of-state company must register for Indiana sales/use tax even if the sales that exceeded the economic nexus threshold were solely tax-exempt sales. This same company appears to be the subject of a private letter ruling that recently appeared in a Wisconsin Tax Bulletin asking Wisconsin’s sales tax economic nexus position on the same set of facts.[1]

The taxpayer is the manufacturer and retailer of bars, brownies, and cookies in various sizes and flavors. All these products are fully cooked food items which are individually wrapped, labeled and sold for human consumption. The food items are not sold heated and utensils are not included. While Indiana informed the taxpayer that it needed to register and file “zero” sales/use tax returns, Wisconsin ruled that the same company did not need to register for Wisconsin’s sales/use tax.

Both states’ economic nexus thresholds require the same level of sales or transactions, but Wisconsin’s guidance deviates from Indiana’s to require that the out-of-state retailer must have taxable sales in order to be required to register for sales/use tax. It is interesting to note that Wisconsin’s Wayfair statute states that both taxable and nontaxable sales are counted toward the $100,000 gross sales threshold.[2] However, the regulation then limits the nexus rule to an “out-of-state retailer that sells taxable products or services into Wisconsin” and that meets either the revenue or transaction threshold.[3] Thus, in Wisconsin, while nontaxable sales count for determining economic nexus, the out-of-state retailer must at least have one taxable sale to have economic nexus.


In December, 2018, California issued Special Notice L-565 to announce its sales tax economic nexus rule, which followed South Dakota’s rule that was upheld by the Supreme Court in the Wayfair case (i.e., either more than $100,000 of sales or at least 200 separate transactions) and was effective on April 1, 2019. The state also issued Special Notice L-591 to set forth a similar economic nexus rule with respect to separate District sales/use tax.

However, on April 25, 2019, Governor Newsom signed Assembly Bill No. 47, which enacted a statute that increased the state’s economic nexus sales threshold to $500,000 and removed the transaction threshold for both the state and local sales/use tax as well as the separate district taxes. This bill supersedes Special Notices L-565 and L-591 and is effective April 1, 2019; accordingly, remote sellers no longer need to track their district sales separately. California issued a new Special Notice, L-632, in April 2019 to explain the changes made by the bill.


Last year, before Wayfair was decided, Georgia enacted HB 61, which established sales tax economic nexus for an out-of-state retailer that (i) has revenue exceeding $250,000 from or (ii) conducts at least 200 retail sales of tangible personal property delivered electronically or physically to a location within Georgia. The bill also provided that in lieu of collected and remitting sales tax, the out-of-state retailer that met the above requirements could comply with use tax notification obligations. These provisions became effective on Jan. 1, 2019.[4]

Since then, Wayfair was decided and approved a sales threshold of $100,000. So on April 28, 2019, Governor Kemp signed HB 182, which reduced Georgia’s economic nexus sales threshold to $100,000 (which is consistent with most of the other states’ rules) and eliminated the alternative use tax collection notice procedures.


Lastly, on April 18, 2019, Hawaii’s legislature passed SB 495 that creates an economic nexus rule for Hawaii’s income tax beginning with the 2020 tax year. This bill has not yet been signed by the Governor but illustrates how states may extend the sales tax economic nexus rules into the income tax landscape. The legislation would utilize the same thresholds of $100,000 of sales/gross income or 200 separate transactions that were ultimately upheld in the Wayfair case.

The flurry of state activity throughout April described above provides just a glimpse into the evolving landscape of economic nexus and its impact on businesses. Aprio’s SALT team can advise you on the specific impact these rules have on your business to ensure that it remains in compliance with ever-changing state tax nexus rules and avoids unnecessary tax exposures and penalties. We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

Check out all Aprio articles on Wayfair and its aftermath.

Interested in speaking with someone? Contact Jeff Glickman.

This article was featured in the May 2019 SALT Newsletter.

[1] Wisconsin Tax Bulletin 205, April 2019.

[2] WI Stat. §77.51(13gm).

[3] WI Admin. Code Tax §11.97(4).

[4] For more detail on HB 61, click here to read our article.

Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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About the Author

Jeff Glickman

Jeff Glickman is the partner-in-charge of Aprio, LLP’s State and Local Tax (SALT) practice. He has over 18 years of SALT consulting experience, advising domestic and international companies in all industries on minimizing their multistate liabilities and risks. He puts cash back into his clients’ businesses by identifying their eligibility for and assisting them in claiming various tax credits, including jobs/investment, retraining, and film/entertainment tax credits. Jeff also maintains a multistate administrative tax dispute and negotiations practice, including obtaining private letter rulings, preparing and negotiating voluntary disclosure agreements, pursuing refund claims, and assisting clients during audits.

(770) 353-4791