Last year, the Wyoming Department of Revenue (DOR) announced new “economic nexus” rules, expanding the number of businesses that will be required to collect and remit tax on sales made into the state.
We have recently confirmed with the Wyoming Liquor Control Division (LCD) and the DOR that licensed wineries making direct-to-consumer (DtC) sales to Wyoming residents will also be required to collect and remit sales tax, if they meet the new nexus thresholds.
Who now has sales tax nexus in Wyoming?
According to Wyoming’s economic nexus rules, businesses without physical presence in the state must begin collecting sales tax on sales to the state if annually they:
- Have gross receipts of more than $100,000 in the state — this includes all sales, including otherwise tax-exempt sales, such as distributions to the LCD; or
- Make more than 200 separate transactions into the state.
Anyone meeting these thresholds will be required, as of February 1, 2019 to begin collecting sales tax on retail sales they make in the state, and begin reporting these sales as soon as March 2019.
If you do not make any retail sales to the state (so are not engaged in the DtC wine market there) you are not required to register as a sales tax collector, even if you do still distribute your products to the LCD or other in-state retailers.
Wyoming was actually quite early to the economic nexus party, passing rules requiring remote sellers to collect and remit sales tax even before the Supreme Court’s monumental ruling last year in South Dakota v. Wayfair, in which such economic nexus rules were legitimized.
Wyoming had to stay implementation of those rules until the Supreme Court made its ruling in Wayfair, but even then the state waited a little while before announcing in November that its rule would be effective in February.
What does this mean for DtC shippers?
The Wyoming LCD and DOR have confirmed with ShipCompliant researchers that wineries making DtC sales to the state will be subject to the economic nexus rules, just as any other remote seller. Therefore DtC shippers should review their annual transactions to the state and determine if and when they will have to begin collecting and remitting sales tax on their DtC orders to Wyoming..
Sales tax collection applies in addition to the 12 percent markup on wine purchases that the state also requires from DtC shippers.
Wyoming sent out notices to many wineries that they believe are close to the $100,000 or 200 separate transactions thresholds, informing them of their likely sales tax obligations.
If a winery has received this notice but will not meet the economic thresholds, it should reach out to the DOR right away. As the notice states, if a winery that received this notice does not either register for sales tax or notify the DOR that it is not subject to these new requirements by January 21, 2019, the DOR will assume a compliance failure and take appropriate punitive action.
If you received a notice, but are in fact not subject to the economic nexus rules (i.e., you will not exceed the annual thresholds), submit a written statement to that effect either by email to email@example.com, or by post to:
Wyoming Department of Revenue
Attn: Terri Lucero, Administrator, Excise Tax Division
122 West 25th St.
Cheyenne, WY 82002
In addition, wineries that use their DtC license to sell directly to Wyoming retailers should make sure to file “resale certificates” from their retailer customers with the DOR in order to be exempted from sales tax collection for such sales. These are “sales for resale,” for which the Wyoming retailer will be the party responsible for collecting and remitting sales tax, not the winery. This is standard practice for wholesale distributions of all products.
ShipCompliant is working to enable collection and remittance of sales tax for DtC wineries that meet the thresholds, and will send out notice to users when this functionality is ready. As more developments come out, we will make sure to keep you informed.