We’ve talked in previous posts about how sales tax is complicated. Keeping up with the constantly changing rates, rules, and boundaries can be a significant resource burden on your operations. And you still may not get it right.
Now with new legislation in the form of “Amazon Laws” and the Marketplace Fairness Act of 2013, even just trying to understand which states you have nexus in (and are therefore obligated to collect and remit sales tax) can make your head spin.
Many businesses operate under the false assumption that if they don’t have an office or physical location in a state, they are not expected to collect sales tax and document exempt sales when selling to customers in that state. While that used to be a fairly safe assumption, today your sales tax obligations are not that simple.
Each state has its own set of sales tax laws, and you are expected to know them and comply with them when doing business within their borders. Here are a few examples of what various states consider to be nexus-creating activities for sales & use tax:
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Advertising in local media or generating revenue via online referrals from locally hosted websites (“click-through nexus”)
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Maintaining certain affiliate relationships, such as related entities or entities conducting activities on your behalf or for your benefit (“affiliate nexus”)
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Maintaining of an inventory, whether consigned, stored, or carried by sales reps
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Travel by employees into a state to perform sales, training, installation, deliveries, repairs, etc.
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Hiring remote employees
Failure to comply can expose your business to an expensive negative audit. Not only could you be assessed with unpaid taxes, but you could also face steep penalties and interest.
To help you be proactive about analyzing your business activities, Oates & Company has partnered with the sales tax experts at Avalara to bring you a 10 Question Nexus Wizard that will help you determine where you might have sales and use tax nexus.
After completing the wizard, you will be sent a report summarizing the states you may have nexus concerns in to help you make better, more informed decisions. We strongly encourage you to consult with your tax specialists and professionals or http://www.oatesco.com/about/general-request/ to learn more about how we can help.
