The Final Holdout: Missouri Joins Other Jurisdictions in Enacting Economic Nexus

On June 30, 2021, Missouri Governor Parson signed S.B. 153 (the Act) into law, debuting economic nexus in the show-me state with an effective date of January 1, 2023. After the United States Supreme Court decision in South Dakota v. Wayfair in June 2018, which reversed Quill by upholding South Dakota’s sales tax requirements for remote businesses with no physical presence, the floodgates opened for other states to enact their own economic nexus standards. By 2020, every state with a sales tax other than Florida and Missouri enacted economic nexus standards for their sales taxes on remote businesses. Earlier this year, Florida instituted an economic nexus standard; as such, on June 30, 2021, Missouri became the final state to enact economic nexus in the three-year window following Wayfair.

An enterprising bill at over 200 pages in length, the Act changes Missouri tax law for multiple tax programs. However, the changes to Missouri’s vendor’s use tax administration by the Act are relatively straightforward and may be reduced to two distinct regimes: the remote retailer agenda, and the marketplace facilitator agenda. Missouri’s “vendor’s use tax” reference herein is the tax charged on sales to a Missouri customer by a vendor that is located outside of the state.

Remote Retailers

Prior to passage of the Act, Missouri required retailers to collect a sales tax or vendor’s use tax from customers only if the retailer had a physical presence in Missouri, either by way of property or employees. Under the statutes created in the Act, retailers without a physical presence in Missouri may establish economic nexus by sales into the state, thereby creating an obligation to collect the vendor’s use tax.

For economic nexus thresholds, the Act provides that gross receipts from retail sales into the state exceeding $100,000 in a twelve-month window create nexus with Missouri. Retailers must evaluate if their activities establish nexus quarterly, reviewing the two most recent and consecutive twelve-month periods for nexus creation. If Missouri-sourced gross receipts exceed $100,000 in either of the two previous twelve-month periods, then the company has established substantial nexus with Missouri, and a requirement to collect the vendor’s use tax on sales into Missouri.

In addition to expanding the vendor’s use tax base to include remote sellers, the Act allows local jurisdictions to use the economic nexus language to institute similar tax programs for remote retailers. As such, any retailer with nexus concerns in Missouri will need to assess its exposure to municipal taxes too.

Marketplace Facilitators

In addition to creating the economic nexus provisions for remote retailers, the Act establishes tax obligations for marketplace facilitators. Under the provisions of the Act, Marketplace facilitators, or e-commerce businesses (like Amazon, e-Bay, Etsy, Wayfair), must collect the vendor’s use tax on all sales into Missouri conducted via their marketplace platforms. Unlike remote retailers, marketplace facilitators do not have a sales threshold that creates nexus – all sales are potentially taxable.

Since the Act requires marketplace facilitators to collect the tax on all taxable sales, sales by third parties on a marketplace facilitator’s platform also have a tax collection requirement. In these situations, the Act places the onus of collecting the vendor’s use tax on the marketplace facilitator. This effectively obligates the marketplace facilitator to collect a use tax on every transaction made on its platform into Missouri.

While the rules regarding marketplace facilitators may alleviate some administrative burden for third-party vendors that complete sales through such platforms, these provisions do not absolve third-party vendors of all use tax collection obligations to Missouri. Any remote retailer that conducts business via the platforms of marketplace facilitators will need to include those sales in its quarterly economic nexus assessment. For example, if a retailer completes an occasional sale into Missouri through its own website, but has over $100,000 of sales into the state in the past twelve months (when including sales on Amazon), the remote retailer still has an obligation to register for and collect the Missouri vendor’s use tax on its occasional sales.

In summary, the Act expands Missouri’s tax base by instituting economic nexus statutes for remote retailers and requiring marketplace facilitators to collect vendor’s use tax on transactions in Missouri. However, with an effective date of January 1, 2023, remote retailers and marketplace facilitators have well over a year to assess their exposure to, and prepare for the compliance requirements of, the vendor use changes created in the Act.


Matt Brown
Managing Director

Matt Howell, CPA
Consultant, State & Local Tax

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