Sales transaction thresholds are so 2018.

One of the two key measures that states have been using to collect sales tax from out-of-state vendors—the number of transactions per year—is falling out of favor.

Instead, a growing number of states—including California, Colorado, North Dakota and South Carolina—are saying all that really matters is the money. They’re dropping, or planning to drop, the transactions threshold and only assessing taxes when vendors cross a total sales amount, such as $100,000 into a state.

“I can really see this purely monetary trend continuing,” Jennifer Weidler Karpchuk, senior counsel at Chamberlain Hrdlicka in Philadelphia said. “States don’t want a law targeting taxpayers that aren’t even worth the cost of targeting. Think of someone selling stickers for 50 cents a piece. This is about balancing fairness, and going after the big fish.”

This is a major shift from 2018, when many states moved quickly to benefit from the U.S. Supreme Court’s June 21 ruling in South Dakota v. Wayfair, which allow them to require out-of-state sellers collect online sales tax. Now, many of these states are working to establish larger safety nets for vendors.

In the 5-4 Wayfair ruling, the majority suggested strongly that South Dakota’s law requiring remote sellers to collect sales tax if they met economic thresholds of at least $100,000 in sales or 200 or more transactions during a given year would pass constitutional muster. The decision tossed out the court’s 1992 physical presence standard affirmed in Quill Corp. v. North Dakota that limited the ability of states to tax remote sales.

Practitioners believe this trend favors both states and third-party vendors, and that more states will adopt the policy in 2019. Further, practitioners believe the possibility of litigation looms over transaction threshold policies, especially as many states also rush to impose duties on marketplace facilitators like Amazon.com Inc., eBay Inc., and Etsy Inc. that host sellers on their sales platforms.

State lawmakers across the country, such as Colorado Rep. Tracy Kraft-Tharp (D), are keen on eliminating the transaction threshold for third-party sellers.

“It just didn’t make sense for us. You could have one transaction that’s $190,000, or 200 transactions that are all $50, and it wouldn’t make sense,” she told Bloomberg Tax. “We just went with $100,000.”

A Purely Monetary Trend

Greg Matson, executive director of the Multistate Tax Commission, said he thinks more states will ditch the transaction threshold.

“Two-hundred pot holders, or widgets, for a dollar each, and you have $200 worth of transactions, yet you’re going to nail this guy? You’re going to nail a remote seller because of the number of transactions?” he said.

Since the ruling, about 30 states have asserted their authority to require collections.

Many states were initially quick to mirror South Dakota’s threshold, but others took a different path. States such as Kansas, Mississippi, New Mexico, and Idaho only ever instituted a volume-based sales threshold.

What About ‘And’ Thresholds?

Some states have decided to walk down a third, and even lonelier, path by instituting “and” thresholds, which require only sellers that trigger both transaction and sales thresholds to collect and remit sales tax. The practice—used by Connecticut, Massachusetts and New York, for example—has drawn mixed reviews.

Karpchuk said going with an “and” threshold is the “fairer option; honed in on a more targeted group.”

Scott Peterson, director of government affairs for tax software company Avalara Inc., told Bloomberg Tax that “and” thresholds are just as bad for states as “or” thresholds because they overly limit a state’s potential to collect tax revenue.

Is Litigation an Issue?

Beyond states targeting larger sellers, Karpchuk argued another factor could influence lawmakers to move away from transaction thresholds: potential lawsuits. But there’s a catch.

“I think a state is opening itself up to litigation in these potential ‘high’ transaction, ‘low’ dollar cases,” Karpchuk said. “However, the low monetary presence in the state underscores the issue in challenging it—the amount at stake would not justify the cost of litigating the issue.”

She said an exception would be if a retailer’s organization backing the taxpayer, or a group of small taxpayers banning together, filed a lawsuit.

Jamie Yesnowitz, a principal and state and local tax practice and national tax office leader at Grant Thornton LLP said lawsuits are more likely over transactional thresholds as they apply to marketplace facilitators, versus third-party vendors, because of the high court’s ruling.

“The Supreme Court endorsed the South Dakota threshold model in the Wayfair ruling, so I’m not sure we’ll see many lawsuits from vendors targeting transaction thresholds,” he said. “State enforcement laws that place transaction thresholds on marketplace facilitators are much more likely to be targeted for lawsuits.”