Sales Tax Blog
Understanding Sales Tax Nexus
All this talk about nexus can be confusing for an online vendor. What exactly does it mean and who determines it? “Nexus” is a term used to designate that a company legally has a presence in that state – that is, they are determined to be doing business in the state. When nexus is created for a company, they are subject to that state’s sales tax requirements. While there are constitutional guidelines on how states can define it, states ultimately determine when nexus is established by a company. The standards vary greatly. Some of the ways nexus can be created… Read More
The Current State of Marketplace Fairness
2013’s holiday shopping season saw a rise in online purchases. Across the country, politicians, states and vendors are debating the good and the bad of a comprehensive tax system for online retailers. Smaller online shops feel the current tax system provides additional burden for competing with big online retailers, while states contend that they are losing far too much revenue from online sales. As vendors struggle with the concept of fair online taxes, events have unfolded in 2013 that will affect the outcome. Here is the current timeline of events: May, 2013: The Marketplace Fairness Act (MFA) of 2013 was… Read More
Sales Tax Holidays: Pros and Cons
Over the last few years, it’s become a trend for states to take “sales tax holidays” throughout the year. These brief periods of generally 2-3 days relieve consumers from tax on certain items and are meant to boost the economy. There are limitations and regulations for each of these holidays, but the idea is to encourage consumers to save money and shop more frequently. Where Does it Apply? So far, 19 states held annual tax holidays in 2013, with at least two scheduled in 2014 for Alabama and Puerto Rico – and most likely the other states continuing as well…. Read More
Holidays, Sales Tax and Shopping Online
This holiday season, lots of shoppers will be staying home to do their purchases. With more options for shipping and convenient delivery, and extra bargains, e-commerce store owners and site developers should provide their customers with tools that can help them navigate the confusion of online shopping. One reason shoppers may be hesitant to do heavy Christmas shopping at an online vendor is that they are uncertain what the sales tax will add to their bill and if, in fact, they even need to pay any. In addition, some vendors are confused themselves and may be breaking the law by… Read More
Sales Tax on Pot … and Other Election Results
This week’s election covered several initiatives on sales tax. For a look at the latest stories, here’s what happened across the country at the ballot box: According to the Denver Post, Colorado voters approved a “special excise and sales tax on recreational marijuana” – a substantial tax that is roughly 20% on most products. The state legalized the drug back in May, when regulatory laws were passed to govern its sale and usage. This November, Portland, Maine legalized pot for adults and two other cities decriminalized it. Proponents of legalizing marijuana have long argued could generate an abundance of tax… Read More
Destination and Origin Based Sales Tax
The term “sales tax sourcing” is used to describe which tax rates are applied to a given purchase, and to which jurisdictions the tax money collected is owed. When you ship a product to another address, the knowledge of your tax rules becomes very important in both the sales tax calculation and when completing your tax returns.
Sales Tax and Use Tax – What’s the Difference?
Most people are familiar with the term “sales tax”, because we’re required to pay it almost every time we make a purchase at a local store. (Unless you’re lucky enough to live in a state with no sales tax.) A sales tax is typically a required percentage of the sale price of a good or service, that is paid by the purchaser at the time of the sale, and collected and remitted by the retailer. Sales taxes only apply to retail transactions – not wholesale ones – because they are a type of “consumption” tax. A “use tax” is not… Read More
What States Have No Sales Tax?
Did you know that some states don’t impose a sales tax at all? Few of us are lucky enough to reside in these states – after all, there are only five of them! The following states have no state sales tax: Delaware Montana New Hampshire Oregon Alaska Some areas in these states may have county or local sales tax, but there is no state-wide sales tax in these five states. Need help remembering? The mnemonic NOMAD will help you recall which states have no sales tax – N for New Hampshire, O for Oregon, M for Montana, A for Alaska,… Read More
Is Destination-Based Sales Tax the Way of the Future?
In 2008, Washington state joined the ranks of those states that are moving to the Destination-based sales tax model. This was pretty well advertised in Washington circles and many online storeowners in Washington state showed the requisite amount of concern over being able to handle this newly created issue. While storeowners in the other 49 states seemed to breathe a collective sigh of relief at not having a physical presence in Washington state the fact is that Washington is not the only state that currently has rules that apply to destination-based sales tax collection. Florida, Texas, California and New York… Read More- « Newer Posts
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