New Sales Tax Implications for Remote Businesses in 2025

New Sales Tax Implications for Remote Businesses in 2025

Nearly seven years after the landmark South Dakota v. Wayfair Supreme Court decision, states continue to refine and expand their sales tax requirements for remote sellers. As we move through 2025, several significant changes are taking effect that businesses need to understand to maintain compliance and avoid costly penalties.

Key Changes This Year

1. Lowered Economic Nexus Thresholds

Several states have reduced their economic nexus thresholds, requiring more businesses to collect and remit sales tax:

• Illinois has lowered its threshold from $100,000 to $75,000 in annual sales
• Michigan now requires registration after just $80,000 in sales, down from $100,000
• Nevada has implemented a progressive threshold system based on business size

For businesses operating close to these previous thresholds, immediate action may be required to ensure compliance.

2. New Reporting Requirements

Twenty-three states have implemented enhanced reporting requirements for remote sellers in 2025:

• Mandatory quarterly reporting of all sales, regardless of taxability
• Detailed customer location data for all transactions
• Certification of compliance with marketplace facilitator rules

These heightened reporting requirements significantly increase the administrative burden on businesses, particularly those selling through multiple channels.

3. Marketplace Facilitator Expansions

The definition of "marketplace facilitator" continues to evolve:

• New regulations encompass payment processors that previously fell outside the definition
• Some states now include referral services that don't process payments
• Several states have expanded recordkeeping requirements for marketplaces

Industry-Specific Impacts

Software and Digital Services

Software and SaaS providers face particular challenges, as states have increasingly moved to tax these offerings:

• Twelve more states now tax SaaS implementations
• Digital product definitions have expanded in 19 states
• New sourcing rules specifically for digital products have been adopted in several jurisdictions

Manufacturing and Wholesale

Manufacturers and wholesalers face new documentation requirements:

• More stringent resale and exemption certificate protocols
• Real-time verification requirements in some states
• Expanded audit focus on exempt sales documentation

Strategies for Compliance

Conduct a Nexus Review

With changing thresholds and definitions, now is the time to conduct a comprehensive nexus review:

1. Analyze sales data by state against current thresholds
2. Evaluate physical presence activities that might create nexus
3. Review marketplace sales and how facilitator rules apply to your business

Update Your Tax Technology

Legacy systems may not be equipped to handle the new requirements:

• Ensure your tax software accounts for the latest rates and rules
• Implement automated exemption certificate management
• Consider AI-powered solutions for jurisdictional determinations

Review Supply Chains

The structure of your supply chain can significantly impact tax obligations:

• Evaluate drop shipping relationships
• Review fulfillment center locations
• Assess inventory positioning strategies

Potential Refund Opportunities

While compliance challenges have increased, so have refund opportunities:

• Overpaid Marketplace Taxes: Many businesses have paid tax on marketplace sales when the facilitator had the obligation
• Incorrect Sourcing: Remote sales are frequently sourced incorrectly, leading to tax overpayments
• Double Taxation: Systems often fail to properly credit taxes paid to other jurisdictions

Next Steps

Remote sellers should take immediate action to address these changes:

1. Conduct a comprehensive compliance review
2. Register in newly applicable jurisdictions
3. Update internal systems and processes
4. Consider a historical review for potential refund opportunities

At Brown & Associates, our sales tax specialists can help you navigate this complex landscape. Our contingency-based approach means you only pay when we deliver results, whether through compliance improvements or recovery of overpaid taxes.

James Wilson is a Senior Sales Tax Consultant at Brown & Associates with over 15 years of experience working with remote sellers on complex compliance issues.