Minimizing Your Taxes and Managing Your Complex Affairs

Tax Tips, Finance Tips, Fun Events

Tips for Individuals, Businesses and Charities. Fun Events.

Is Your Business Charging the Correct Sales Tax?

Many businesses may be unaware that they may have to collect sales tax in states where they don’t have a physical presence.

 The June 2018 Wayfair Supreme Court decision allows states to require out-of-state businesses without a physical presence in a state to collect sales tax if they have economic nexus to a state.

Around 40 states (out of the 45 states with a sales tax) have adopted economic nexus rules. California’s rules were effective April 1, 2019 (see my blog pst from March)

 Many states require sales tax collection if in current or prior year:

(a)   Sales over $100,000 in state

(b)   Over 200 transactions in state (including nontaxable transactions)

Tax Trap: Don’t assume that all stats follow the same rules. Some states impose sales tax on services, software, advertising and information technology. So following your home state rules may lead to trouble.

Uncollected sales tax is the responsibility of the seller which could cost you up to 10% of your sales price. Having to ask your client after the fact to pay sales taxes is not feasible.

If you are enjoying my tax and finance tips and would like to buy me a beverage

Richard Pon CPA, CFP