All states but one that impose a sales and use tax now have laws requiring out-of-state companies to collect tax if they have a significant economic presence in a state.  The Governor of Missouri, the last remaining state, is expected to sign a similar law this month.  The change stems from a 2018 United States Supreme Court case, the impact of which is far broader than many realize.

• Collection obligations are not limited to retailers of tangible personal property—many service companies, and in particular SaaS and software companies, are at risk.

• Thresholds vary by state, but more than $100,000 in sales or 200 transactions (invoices) within a 12 month period is generally sufficient to create a sales tax collection obligation. Wholesale sales generally count toward these thresholds.

• States are increasingly adopting economic thresholds for income tax purposes, applicable to both entity-level taxes and personal income taxes for owners of pass-through entities.