Ready for a Sales Tax Nexus Check-Up?

If you didn’t review your sales tax position at the end of the year and make changes prior to January 1, it’s not too late. It’s never too late to improve your sales tax position. While January 1 is an ideal time to implement a new process, the longer you wait the greater your potential of increased (and unnecessary) sales tax risk.

Even if you looked at your sales tax position within the last year, a lot can change.

• Have you added new personnel in new states?
• Have you picked up revenue in a state you were not in previously?
• Have you launched a new product?
• Have the taxing rules and rates changed recently?

Some of these questions are directed at whether your sales tax nexus footprint has expanded. Nexus is the cornerstone to sales tax compliance – without sales tax nexus you have no worries – or few worries. With sales tax nexus, you should ask some follow-on questions to determine if you have sales tax risk.

Sales tax nexus is a tricky issue nowadays as states continue to expand their definition of nexus. You may have seen some of the click-thru nexus laws that were passed over the last several years as well as economic nexus as described in my last blog.

So keeping up with nexus is a two-step process:

(1) understanding your business activities.

(2) keeping abreast of states’ changing definition of sales tax nexus.

When was the last time you had a sales tax nexus check-up?

Here’s a simple questionnaire that provides some insight into various nexus creating activities. You may also benefit from a professional review – these don’t have to be painful. And certainly not as painful as an unplanned audit or assessment. If it’s been over a year since you looked at nexus, it’s probably time to take a look.