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Earlier this year, we predicted that 35 states would require marketplace facilitators to collect sales tax by the end of 2019. At the beginning of 2019, 12 states required collection by marketplace facilitators. Three months after our “35 states call,” 26 states have now adopted laws or rules to require collection by marketplace facilitators. Although many state legislatures have adjourned for the year, several states are still meeting and considering tax/budget issues. Thus, we reiterate our projection of 35 states by the end of 2019.

Other states which we think are most likely to be added to the current count by the end of 2019 include: Colorado (where Governor Jared Polis (D) will almost certainly sign the legislature’s already-passed marketplace bill), Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, North Carolina, and Ohio.

While there has been intense interest and rapid movement on this issue, the approach that individual states have pursued has varied somewhat. For example, while most states have worked legislatively to establish these new collection schemes, two states (Arizona and Wisconsin) are working under mandates from their departments of revenue. States have also taken different approaches to what kinds of sales are taxable on marketplaces (tangible personal property, digital goods, services, or some combination), what thresholds trigger taxability, and how much liability relief to grant in cases where a marketplace relies on erroneous information provided by a third-party seller.

We expect that lawmakers will return to the issue of marketplace facilitators in 2020 to clarify definitions and make other tweaks. Thus, marketplace facilitators will again be the subject of legislative debate next year.

Update (July 29, 2019)

An updated map of legislative activity appears below.