Sales tax nexus is the connection between a seller and a state that requires the seller to collect and remit tax on sales made in that state. While nexus might be an easy concept to understand, it can be challenging to determine what activities or thresholds trigger a nexus obligation, where you've established nexus, and how it can impact your business. So, it might not be the perfect topic to talk about while sipping coffee from your mug and driving a big old RV between states on a state-by-state sales tax tour, but it is a necessary 'evil to discuss.' But these days I am more prone to spill from my mug when driving, so I'm parked for the week and will just take it easy as I tell you about the special Sales Tax Tuesday offer I have worked up for you with the folks at Avalara.
Until recently, sales tax nexus was always linked to physical presence, but even physical presence could sometimes be hard to define. With the explosion of the Internet and eCommerce sales, and then last June’s1 U.S. Supreme Court decision (South Dakota v. Wayfair, Inc.), physical presence is no longer the standard for establishing nexus. That's why I took a break from our ‘traveling RV state-by-state sales tax tour’ last June to bring you a special edition of Sales Tax Tuesday on that decision. In fact, Insightful Accountant interrupted our ‘road show’ multiple times last fall to talk about several of the state implications/implementations subsequent to the ‘Wayfair’ decision. That's one reason why we got behind in covering all of the states during 2018.
But even with all that coverage on 'nexus this and nexus that' it seems that too few people are literally taking these changes seriously, far too many small merchants think “I’m too small, none of this can possibly impact me…I just don’t do enough business in other states to be impacted…” As a result, I wrote an article late last fall about how small sellers could be impacted by ‘economic nexus’ especially when they are using an eCommerce marketplace like Amazon or Ebay. Even with that, our friends at Avalara tell me that people are still ignoring the warnings about the impact of all of these nexus-related changes.
Avalara new
I say our friends at Avalara, because now is when I need to remind you that Sales Tax Tuesday is a joint venture between Insightful Accountant and Avalara, the tax people. So, while I am typically touring the various states to find out what there is to see, do, eat and pay in the way of sales tax, I do from time to time take these little diversions to bring you ‘need to know’ information about sales tax. This is after all ‘Sales Tax’ Tuesday (not ‘Travel Tip’ Tuesday).
So, this week I want to make certain you are aware of some references that are available to you as an Insightful Accountant reader. We have teamed up with Avalara to offer you two valuable whitepapers and an assessment tool to help you determine your current status and potential ‘nexus’ liability.
Insightful Accountant and Avalara want to provide you with the free whitepaper titled, SCOTUS and the QuickBooks User: What you need to know about collecting sales tax online. This covers the implications of the Supreme Court’s decision upon your business as well as all of the new states’ laws that may impact your operations. It’s designed to guide you through a 3-step process toward compliance by helping you:
- Reassess Nexus in terms of where your current and future customers are
- Revisit Registrations to help you identify in which state(s) you need to collect and remit sales taxes
- Rethink Compliance by assessing if there is a better way to manage your sales tax compliance than the way you are currently doing so.
We are jointly offering you this guide along with an interactive tool and additional resources to help you stay on top of your changing responsibilities and sales tax nexus obligations, along with your need to understand what business activities trigger nexus. The whitepapers and assessment tool can help you monitor fluctuating or expanding activities associated with your business that may trigger nexus, and review state tax authority updates and jurisdictional nuances that will impact your situation. More specifically these resources can help you:
- Register with the proper taxing authority/authorities.
- Prepare to start collecting sales tax in each new jurisdiction, which means that you need to fully understand the sales tax requirements specific to that jurisdiction.
- The guide can provide you with links to valuable Avalara resources to assist you in meeting those requirements.
- You will need to remit sales tax in the new jurisdiction(s) and some point and resources are available to give you remittance guidelines and deadlines for each jurisdiction.
- If you established nexus in the past, but failed to register or haven’t been collecting sales tax, the guide can help you with how to achieve compliance.
Simply click on this link to access your copy of these valuable whitepapers and nexus compliance tool.
And be sure to join me next Tuesday as we are back on the 'sales tax road again'.
1-On June 21, 2018, the Supreme Court ruled in the case of South Dakota v. Wayfair Inc., giving way for states to impose sales tax on remote sellers based on economic nexus (the volume or dollar value of sales into a state) and not just physical presence.
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