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Managing US Sales Tax as an
International Business is Tough

The U.S. has some of the most complex sales tax laws in the world. With constantly evolving laws and different taxability and nexus rules per state, it's a lot for any business to keep up with, especially an international one.  

The good thing is, TaxConnex is here to help. 

U.S. Sales Tax vs. VAT

US sales tax is a completely different beast than managing GST or VAT. Preview some of what makes sales tax so complex and different by checking out the dropdowns to the right.  

Pass - Through Tax & Single Stage Collection

Sales tax is a single stage collection, meaning it is charged just once, at the point of retail sale. The tax is paid by the end user and usually collected by the seller to be passed on to the government. It is the sellers responsibility to accurately charge, collect and remit the tax, even though the tax is on the consumer. 

 

Separated from the Price of Goods

VAT is typically included in the price of goods and services. This is not true for sales tax (for the most part). Sales tax is generally required to be separately stated on the invoice outside of the price of goods and services. 

Nexus

Your obligation to collect and remit sales tax is based on where you have established nexus. For international businesses without U.S. locations or employees, this is typically established through economic nexus.

Economic nexus standards are decided on the state level and you must understand the thresholds of each state in which you have sales.

Learn more about understanding your nexus footprint here!

Taxability

For the most part, VAT applies to the sale of good and services. Typically, US sales tax is applied to tangible personal property, and sometimes services. But, just like nexus, decided on at the state and local jurisdictional level. 

Telecommunications, software, Saas, and services businesses have to be especially mindful of the states that do and don't tax their products/services, but it is important for all businesses to ensure their products and/or services are taxable to understand if they have a US sales tax obligation. 

 

Learn more about TaxConnex's taxability reviews!

 

 

Sales Tax Is Charged Based on End User Destination

Most states require sales tax to be calculated based on the destination of the goods or services will be consumed or utilized.

Even if you do have a physical location within the United States that produces products or services, the sales tax rate that you need to charge is not based on that location but instead based on where the item or service will be used. 

 

Determine Where You Have Economic Nexus

Evaluate where you've met economic thresholds in our economic nexus map! Review the thresholds for each state and gain insight into whether they evaluate thresholds based on gross or retail sales. 

View the Map
Nexus Map | TaxConnex

Let TaxConnex Manage Your US Sales Tax Process

Understanding When You Need to Start Collecting U.S. Sales Tax

TaxConnex provides advisory services to help you understand where you have a sales and use tax obligation. We can perform a nexus and taxability review to understand where you may have an obligation and then advise you on next steps for your business. 

Learn more
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Register Your Business for Sales Tax

Once you’ve established nexus and determined that your products/service are taxable within one or more US states, it’s time to get registered. If you are a business with a physical location and employees inside the US, this can be a relatively simple process, but for those with no physical location or employees, it can be a bit tricky.  

The information most commonly asked for in a sales and use tax permit application includes the the companies Federal EIN (Employer Identification Number), date the business first had taxable sales in the state as well as personal information including social security numbers of officers and potentially home addresses and copies of driver’s licenses as well. 

Some of this information can be especially challenging for a foreign-based business.  TaxConnex will guide you through this process, bringing in partners, as needed to ensure you can properly register to start complying. 

 

Ensuring a Proper Calc & Filing Process is in Place

TaxConnex will help evaluate your situation to determine the best options for ensuring you get the correct rates on your invoices and managing your filing and remittance. 

Learn More
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Get in touch!

Ready to learn more about TaxConnex and how we can conquer the chaos of US sales tax for your business? Fill out the form to the right and one of our consultants will be in touch!
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We understand that American sales tax is virtually the exact equivalent of value-added tax (VAT) in the U.K., but in the U.K., it’s paid centrally. Having the vast array of different municipalities and cities makes this process much more difficult for our company. I would recommend TaxConnex to any and every business. Our team is no longer stretched during peak times and the cost of service, for the value and benefit we receive is exceptional.”
“Being based in the U.K., our team had a lack of understanding of sales tax. Ensuring everything was done precisely, from the get-go, was extremely important to us. We knew it was best to look for a specialized solution that could help us with everything.”
“It’s a great value for our company to be invested with TaxConnex. You can find tax partners in a lot of places but every year we remind ourselves that the value we get from TaxConnex for what we pay is worth it!.

Working with TaxConnex has been an amazing experience. Our relationship has allowed me to maintain my sales and use tax duties while also being able to tackle other projects without us having to hire an additional full-time employee to manage compliance and filings." 

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Jon Powell, Financial Controller - Tellermate, Inc
Merecedes Collins, AR Specialist - Dotmatics
Zerai Bahta, BODi, formerly BeachBody
Lorin Welsh, Sales Tax Accountant - Conco Services