If you don’t live in the United States (or even if you do), the laws surrounding US Sales Tax can be quite confusing. In fact, the United States has possibly the world’s most complex sales tax regime. This is because each state sets its own sales tax rules, and states often take widely varying approaches. As a result, every state has a different tax framework, with variations in regulation covering everything from tax liability and tax rates to exemption categories and reporting requirements. On top of this, local area tax jurisdictions also have powers over some aspects of taxation and can set different rules for their area. 

Time for a refresher on drop shipments - Check out our blog from earlier this year on navigating drop shipments, or watch our quick video where Jeff & Brian break it down. 

Technology companies have historically considered themselves fairly insulated from multi-state 

The pandemic has prompted shelter in place orders across the country, meaning many employees have been working from home to contain COVID-19. Some of your workers may have also chosen to work in second homes or with different family for a multitude of reasons ranging from comfort to avoiding hot spots of the outbreak.

The US Supreme Court ruling in South Dakota v. Wayfair, Inc. et al gave rapid rise to the new sales and use tax obligations for online sellers. The rule treats a virtual storefront similar to a physical storefront. How did we get there and what should every business be doing to reduce risk?  

Sales and use tax compliance is not only difficult and time-consuming – it’s also expensive if you do it wrong.

Some time ago you did your homework regarding sales tax. You discovered which of the economic nexus thresholds that you meet, calculated your sales in those states and when required have collected and remitted the sales tax. To do this, you obtained a sales tax license in each jurisdiction where you established nexus.

In talking with friends and family about what we do at TaxConnex in terms of preparing and filing sales tax returns – especially this time of the year – they often say, “Oh you must be crazy busy right now”.  I sometimes laugh, but often I sigh stating that income tax season is generally a once a year deal (this year pushed out at least an extra three months) and sales tax is EVERY month.

What is a marketplace facilitator?

Sales tax automation has come a long way since the Quill vs. North Dakota case in 1992. Now, even the smallest multi-state businesses and startups have access to sales tax automation options that lower costs and ease the burden of compliance. With the evolving rules and regulations across states and jurisdictions for sales tax in the U.S., it makes sense to automate where you can.

As a few states tiptoe into re-opening during the COVID-19 pandemic, more states have joined previous warnings that the loss of sales taxes is going to hit soon – and hard.

Many companies are not aware that tax regulations in each state may obligate them to collect and pay sales & use tax even when they do not have a physical presence there. Determining sales tax nexus is a tricky proposition, and there are many moving parts to monitor. In this article, TaxConnex shares how sales tax nexus is determined and offers suggestions to help companies meet their obligations under the law.

If your company sells into multiple states and has established sales tax nexus, it is critical that you evaluate your business’s exposure to sales-and-use-tax liability as soon as possible. There are more than 10,000 taxing jurisdictions and many have their own unique set of rules and interpretations. Not taxing a product or service appropriately could lead to significant exposure over time. And, you may be the person on the line to pay the penalties and interest, not your business.

Sales into the state of Alaska have always been exempt from state level sales tax; however, many of the local jurisdictions in Alaska have enforced sales tax collection at the local level provided a business has a physical presence.  Now, with Wayfair, even remote sellers need to worry about collecting the local sales tax in Alaska.

The constantly changing nature of COVID-19 has left people with a lot of uncertainty. Sales tax isn’t an exception to that uncertainty as over 20 states have announced changes to their sales tax deadlines or policies in order to help businesses as they navigate life during the pandemic. If you’re like many businesses, you have sales tax nexus in multiple states. Keeping up with all their different regulations was difficult enough before COVID-19, and now it’s more complicated than ever.