The U.S. Supreme Court’s physical presence standard is dead, and 30 states plus the District of Columbia have passed laws or approved rules requiring remote sellers to collect sales and use tax. But there’s still a lot left to figure out in the post-Wayfair world.

States’ efforts to recoup billions of dollars in uncollected sales tax revenue will continue in 2019, with legislation and regulations coming in several categories: economic nexus—or doing a sufficient amount of business in the state to be taxed—sales and use tax system simplification, and how to handle online marketplaces that facilitate transactions by third-party sellers.

“I’d expect to see economic nexus legislation in every sales tax state if they haven’t already implemented it,” Richard Cram, national nexus program director for the Multistate Tax Commission, told Bloomberg Tax. “And also we’ll see them pass a law requiring online marketplaces to be the ones to collect and remit the taxes on third-party sales. They know they’re not going to get any taxes if they don’t do those two things.”

Amazon.com Inc. is working with states that have approved or introduced marketplace facilitator legislation, although the e-commerce giant has yet to issue an official stance on such laws, Jill Kerr, spokeswoman for the company, told Bloomberg Tax. Amazon Marketplace is by far the largest online marketplace with more than 5 million third-party sellers on its platform, according to Marketplace Pulse, an analytical firm that claims to collect more data on e-commerce platforms than any other organization.

Also in the coming year, some states are likely to get sued, especially if they venture too far from the South Dakota model at the center of the South Dakota v. Wayfair case or have a tax structure viewed as so complex it imposes an unconstitutional burden on interstate commerce.

“Among the new states imposing remote sales tax are some who are nowhere close to the standards in the Wayfair ruling,” Steve DelBianco, president of NetChoice, a trade association of e-commerce business and online consumers. “That includes states where hundreds of local tax jurisdictions have their own rules, returns, and audits, like Arizona, Colorado, and Louisiana, who are likely targets for litigation.”

29 States

By the end of 2018, 29 of the 45 states with a sales tax, plus Washington, D.C. had passed collection and remittance requirements on out-of-state vendors based on business volume—some of them by affirming laws or rules in place prior to the June 21 ruling.

Nearly all have followed two of the three main principles outlined by now-retired Justice Anthony Kennedy in the 5-4 decision: a safe harbor for those with limited business in the state and no retroactive application of the law for past taxes due. The third prong, membership in the Streamlined Sales and Use Tax Agreement—a program under which sellers collect tax voluntarily and remit it to the 24 state participants—is a mixed bag among the states asserting remote sales tax authority. Eighteen of the 29 states are members of the SSUTA. The remaining eleven states and D.C. are not.

Only vendors with more than $100,000 in sales or 200 transactions into South Dakota are required to collect and remit. In 2019, the size of the triggering threshold will be a big debate in states with larger economies.

California released guidance using South Dakota’s thresholds, but legislation with a $500,000 threshold was introduced soon after. Pennsylvania has a $10,000 sales threshold, while Texas will have a $500,000 threshold.

Other states that are likely to consider remote sales tax collection authority bills next year include Florida, Kansas, Missouri, New York, Tennessee, and Washington. Maryland will issue emergency remote sales tax rules.

Officials in Missouri, Nebraska, North Carolina, and West Virginia expect their states to take up marketplace facilitator laws.

Complex Systems

Several states will attempt to reduce the complexity of their sales and use tax systems to come into line with Wayfair.

After both in- and out-of-state businesses complained about the complexity of Colorado’s system, the DOR offered a grace period for compliance through May 31, 2019. That gives the General Assembly an opportunity to tackle the byzantine nature of Colorado’s tax structure that includes some 683 combinations of local taxing jurisdictions.

Alabama’s DOR said it believes its Simplified Sellers Use Tax program shows it is sufficiently streamlined. But tax attorney Bruce Ely of Bradley Arant Boult Cummings LLP said the legislature needs to pursue other streamlining efforts in 2019, such as those laid out in a 2012 study commission report, or it could be vulnerable to litigation.

One of the five non-sales-tax states—New Hampshire—will consider legislation to protect its sellers from having to pay sales and use taxes in other states post-Wayfair. Officials in two other non-sales-tax states—Montana and Delaware—said they didn’t see such a move happening there.

Uniformity From Congress?

As states act independently of one another, vendors may turn to Congress in 2019 to provide uniform guardrails for what they may and may not do.

“The court has made a major judgment, a flawed one, that says you can essentially turn small businesses around the country into tax collectors because governors and state legislators have been ducking the hard choices by not doing the collections themselves,” Sen. Ron Wyden (D-Ore.) told Bloomberg TV Dec. 13. “I’m told by those that are experts in the field that we could really have a sales tax Armageddon early next year.”

Wyden is one of four senators behind the Online Sales Simplicity and Small Business Relief Act of 2018 (S. 3725), a bill that would prohibit states from imposing sales tax collection duties on remote sellers for any sale that occurred prior to June 21—the day the Court released the Wayfair decision.

“There’s some hope Congress will step in and corral the states with some federal legislation,” Darcy Kooiker, a principal at Ryan LLC, told Bloomberg Tax. “States that were proposing retroactivity were so publicly shamed that most have withdrawn it. But it would be nice to have federal legislation so no other states go rogue.”

Hawaii, for example, had to backtrack this summer and won’t retroactively administer its online sales tax regime. The department previously said it would retroactively apply the general excise tax rule, but reversed that position “to avoid any constitutional concerns.” Groups like the Washington, D.C.-based Council On State Taxation (COST) had come out strongly against any potential retroactive application in the state, as they have in others.

Transactions Out?

There’s a good chance states and tax professionals will continue to grapple with Wayfair’s impact beyond 2019. One lingering issue is whether a transactions threshold is the best metric for determining how much business a seller should have in a state before having to collect tax. Some argue that states should only look at sales revenue.

“My gut tells me they’ll look at transactions and say ‘We’re getting some really odd results,’” Scott Peterson, director of government affairs at tax compliance software company Avalara Inc., told Bloomberg Tax. “States will rethink that threshold once they start getting returns for 8 or 9 cents.”

—With assistance from Andrew M. Ballard in Raleigh, N.C.; Michael J. Bologna in Chicago; Christopher Brown in St. Louis; Karn Dhingra in Houston; Alex Ebert in Columbus, Ohio; Laura Mahoney in Sacramento, Calif.; Chris Marr in Atlanta; Aaron Nicodemus in Boston; Leslie A. Pappas in Philadelphia; Paul Shukovsky in Seattle; Gerald B. Silverman in Albany, N.Y.; and Paul Stinson in Austin, Texas