Many manufacturers, wholesalers, and distributors believe they have minimal sales tax obligations due to the likelihood of sales tax-exempt transactions. However, there are numerous pitfalls to be aware of.

So far this year, multiple states have introduced new exemptions including some on necessities and at least one proposed tax credit on a politically charged kitchen appliance.

At least three states opened this year with proposals to revamp taxes concerning digital advertising and data.

Online retailers and eCommerce companies have been the focal point of taxing jurisdictions and their updated nexus laws for years.

Our third annual survey of financial professionals revealed a sales tax storm in many industries. Financial leaders continue to lean on internal resources while wrestling with the current economy, inflation and a tight job market.

Retail/eCommerce respondents to our survey reported challenges such as audits, timely filing of sales tax returns and charging the correct sales tax.

“Services” are generally not subject to sales tax while tangible personal property generally is subject to sales tax. This oversimplification can get you sideways in various states as there are lots of exceptions to these general rules. Kentucky is the latest in terms of taxing specific services.

States aren’t the only ones who can complicate your life with sales tax: Local governments want to play their part, too. Cities, counties and towns nationwide – which have almost all seen an increase in their sales tax revenues in recent years – constantly tinker with their own sales taxes. The states and local jurisdictions have been the beneficiary of economic nexus over the past four years.

Two recent state courts’ determinations – one good for the seller, one not – show the continuing reach of Wayfair almost five years after the landmark Supreme Court decision regarding economic nexus.

Studies show that some 1.4 million people in the Commonwealth of Puerto Rico (more than a third of population) do their shopping online, with annual online purchases in the U.S. territory now at $458 million. The size of the average online transaction in Puerto Rico has almost tripled in the past six years.

It’s a fair bet, then, that sooner or later you’re going to be selling online into Puerto Rico, which has a sales tax. Every U.S. state with a sales tax has economic nexus thresholds – does Puerto Rico?

Next summer will mark five years since the Supreme Court ignited economic sales tax nexus with the South Dakota v. Wayfair, Inc et aldecision. Many businesses are still trying to figure out how to manage the resulting obligations, but one thing’s clear:

Now every state with a sales tax has economic nexus.

This article was originally featured in the Retailist on October 3rd, 2022.

A proposed penalty from the Federal Communication Commission shows the danger of a hire-and-forget attitude toward a third-party for tax compliance.

By now most businesses that sell online have heard about nexus, the connection that a company has with a jurisdiction that ignites a sales tax obligation. Nexus can be economic and based on a threshold of sales volume in a given time. Nexus can also be physical, created by inventory, employees or reps in a state or jurisdiction.

This June marked 4 years since the landmark Supreme Court decision that launched economic nexus, South Dakota v. Wayfair, Inc et al, but many businesses are still trying to figure out how to manage sales tax obligations brought on by this decision.  The following is a list of 3 things you need to know to get started in understanding your economic nexus footprint.

Understanding economic and physical nexus and the taxability of your products and services goes a long way to ensuring your sales tax compliance. But nothing’s that simple with sales tax. 

Online retailers face a lot of challenges today. Sales tax obligations are among them. 

Several recent court cases show how tricky the legal system can be for online sellers managing sales tax obligations.