Many businesses share in the challenge to be compliant with the most recent sales tax laws. Having the proper insight and awareness as to what legislation is in place and what’s coming down the pipeline requires a significant investment of time and resources. Laws and applicability are established at the state level and can be collected in a variety of ways, either via the retailer, or the consumer (through the retailer) at the point of consumption. Keeping up with filings, nexus, and individual state laws can be confusing, as each business must be aware of the pitfalls that may arise in regards to sales tax applicability in another state.
The following points are several notable situations worth paying attention to when determining sales tax applicability across multiple states.
Creating sales tax nexus
- Storefronts or company offices
- Hiring of employees
- Storing of inventory in warehouse or distribution centers
- Frequent delivery of goods
- Temporary presence (Such as Conventions or Trade shows)
- Internet sales
- Destination vs. Origin based sales tax
Photo Credit: http://blog.taxjar.com/sales-tax-map/
- Applying for, or renewing your permit as necessary, prior to collecting sales tax. This includes being knowledgeable on what each state requires when it comes to sales tax.
- Being confident that you are collecting at the appropriate rate and for the correct state. Many states have hundreds to thousands of taxing districts with varying rates.
Compliance within the realm of sales tax can be a daunting task. Sales tax legislation is constantly shifting, and there are many nuances worked into the tax code. Have a Barnes Dennig tax representative reach out to you by request if you have questions or need guidance on sales tax compliance within your business.