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Remote Seller Threshold Terms

How is economic nexus threshold based on "gross sales" calculated?

If the threshold is applied based on “gross sales”, all sales and transactions into the state are included in determining whether the remote seller meets or exceeds the threshold, including sales for resale and other exempt or nontaxable sales.  

For example:
Company A has $400,000 (400 transactions) in total sales to State 1 for the calendar year that are made up of the following:

  • $220,000 (220 transactions) of those sales are to wholesalers that provided exemption certificates claiming sales for resale.
  • $75,000 (75 transactions) of those sales are to purchasers claiming exemption for purposes other than resale (use in manufacturing (exemption certificate on file, sales to exempt entities).
  • $10,000 (10 transactions) of those sales are sales that qualify for product exemptions.
  • $95,000 (95 transactions) are taxable sales to purchasers.

Company A has $400,000 (400 transactions) in gross sales for purposes of computing the thresholds.

How is the economic nexus threshold based on "retail sales" calculated?

“Retail sales” are defined in the SSUTA, in part, as any sale other than a sale for resale. Since sales for resale are specifically excluded from the definition of “retail sale,” they are not included in the threshold computation. However, sales that are not taxable because of the provision of an exemption certificate or that are exempt due to a product exemption, such as food in certain states, are included in the computation.  

For example:
Company A has $400,000 (400 transactions) in total sales to State 1 for the calendar year that are made up of the following:

  • $220,000 (220 transactions) of those sales are to wholesalers that provided exemption certificates claiming sales for resale.
  • $75,000 (75 transactions) of those sales are to purchasers claiming exemption for purposes other than resale (use in manufacturing, sales to exempt entities).
  • $10,000 (10 transactions) of those sales are sales that qualify for product exemptions.
  • $95,000 (95 transactions) are taxable sales to purchasers.

Company A has $180,000 (180 transactions) in sales that count toward the threshold computation.

How is the economic nexus threshold based on "taxable sales" calculated?

“Taxable sales” means all transactions that are (or should be) taxed. Transactions that are not taxed due to the provision of an exemption certificate or other documentation on the part of the purchaser are not included in “taxable sales.” 

For example:
Company A has $400,000 (400 transactions) in total sales to State 1 for the calendar year that are made up of the following:

  • $220,000 (220 transactions) of those sales are to wholesalers that provided exemption certificates claiming sales for resale.
  • $75,000 (75 transactions) of those sales are to purchasers claiming exemption for purposes other than resale (use in manufacturing, sales to exempt entities).
  • $10,000 (10 transactions) of those sales are sales that qualify for product exemptions.
  • $95,000 (95 transactions) are taxable sales to purchasers.

Company A has $95,000 (95 transactions) in “taxable sales” that count toward the threshold computation.