AccurateTax.com https://www.accuratetax.com Take the Guesswork out of Sales Tax Fri, 30 Nov 2018 00:50:21 -0500 en-US hourly 1 https://wordpress.org/?v=4.9.8 https://www.accuratetax.com/wp-content/uploads/2017/01/cropped-favicon_large-144x144.png AccurateTax.com https://www.accuratetax.com 32 32 Preparing Your Business for Q4 Sales Tax https://www.accuratetax.com/blog/preparing-your-business-for-q4-sales-tax/ Tue, 27 Nov 2018 16:24:37 +0000 https://www.accuratetax.com/?p=5383 preparing your business for Q4 sales tax

This has been a big year for remote retailers. The Wayfair ruling handed down by the Supreme Court in June upended how many people collect and report sales tax in states that previously had laws pending. As we enter the heart of the busiest retail month of the year, it’s imperative that you are prepared not only for the changes Wayfair represents in sales tax collection, but for your Q4 sales and tax withholdings in general. Let’s take a closer look at the steps you can take right now to ensure you end the year ready and organized for the... Read More

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preparing your business for Q4 sales tax

This has been a big year for remote retailers. The Wayfair ruling handed down by the Supreme Court in June upended how many people collect and report sales tax in states that previously had laws pending. As we enter the heart of the busiest retail month of the year, it’s imperative that you are prepared not only for the changes Wayfair represents in sales tax collection, but for your Q4 sales and tax withholdings in general.

Let’s take a closer look at the steps you can take right now to ensure you end the year ready and organized for the final report of the FY2018 tax season.

Establishing Economic Nexus for Your Sales

Until very recently, retailers only had to worry about where they had physical nexus (with a few small exceptions). For a small business with a single location, this made things relatively easy. Since Wayfair, however, economic nexus laws in 17 states and pending laws in another 12 states mean you will need to track sales and collect sales tax in quite a few additional states if you have applicable sales there.

At the same time, there are sales thresholds in each of these states ranging from $10,000 in sales to $500,000 in sales, meaning you may still not need to collect sales tax if your sales volume is low enough. For this reason, it’s important that you have a clear sense of where you do business, what your sales volume looks like, and what you’ll need to do to file sales tax returns in those states when applicable.

Tracking and Managing Your Sales Volume

Economic nexus makes it more important than ever to have a very carefully tracked sales, organized by location so you can easily see which jurisdictions will require collection of sales taxes and which will not. Not only are there several states in which the laws are actively being changed, but the volume of sales required to reach that threshold is different in every state. This must be done across all sales channels, so your website, FBA sales, eBay sales – they’re all eligible in aggregate toward this threshold.

The Next Stage of Economic Nexus

This is the first fourth quarter sales season under the new Economic Nexus paradigm, meaning many businesses are not prepared for the differences in how they track and report their sales. Even for those businesses that have a clear sense of their Q4 sales volume as compared to the rest of the year, they likely didn’t have it broken down by state in the past.

That’s why it is so important to have a system in place that carefully manages and breaks up your transactions, so you can see total sales volume by state, by product type (in the instance that certain items are exempt in some locations but not others) and totaled across all sales channels. Do this properly and you’ll be better prepared for your next sales tax filing deadline, and for the full year ahead in 2019 when new Economic Nexus laws will be implemented and still more likely passed.

Creating a System that Works for You

Whether you are a small business that does business in only a handful of states or a medium sized online retailer with customers around the country, the shifting sales tax landscape will have an impact on your business. The best way to avoid surprises is to be as prepared as possible for these changes in advance of quarterly filings and the next fiscal year. The steps above will give you a good starting point but stay vigilant and up to date as new sales tax laws are passed that might impact your business.

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Midterm Tax Measure Results for 2018 https://www.accuratetax.com/blog/midterm-tax-measure-results-for-2018/ Wed, 14 Nov 2018 23:46:41 +0000 https://www.accuratetax.com/?p=5375 midterm ballot initiatives 2018

Every year at the ballot box, there are several tax measures across the country. On average, about half of those measures will pass, impacting residents in a variety of ways – from new sales tax regulations to levies and property tax increases for local education initiatives. This year was no different, with 18 midterm election tax measures considered on November 6. Let’s take a closer look at which of these passed and what the new laws will mean for affected residents. Michigan Proposal 1 Michigan became the first state in the Midwest to legalize marijuana by passing Proposal 1 by... Read More

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midterm ballot initiatives 2018

Every year at the ballot box, there are several tax measures across the country. On average, about half of those measures will pass, impacting residents in a variety of ways – from new sales tax regulations to levies and property tax increases for local education initiatives.

This year was no different, with 18 midterm election tax measures considered on November 6. Let’s take a closer look at which of these passed and what the new laws will mean for affected residents.

Michigan Proposal 1

Michigan became the first state in the Midwest to legalize marijuana by passing Proposal 1 by a vote of 55.9% to 44.1%. The new law not only makes marijuana legal, it sets up a 10% excise tax on all purchases, expected to act as a boon to State revenue.

Washington Initiative 1634

Passed by a vote of 55.5% to 44.5%, Washington Initiative 1634, to “Prohibit Local Taxes on Groceries” is designed to keep local municipalities from taxing groceries and is similar to a proposal in Oregon that did not pass. Washington already has sales tax exemptions for most groceries in the state, so the new law is expected to largely be a preemptive act to block current and future attempts to levy new taxes on sodas and other non-essential foods and beverages.

Arizona Proposition 126

Arizona’s Proposition 126, to “Prohibit New or Increased Taxes on Services” passed with overwhelming support, 64% to 36%. The new law is designed to keep new taxes from being implemented on existing services. The state already has exemptions on services such as gym memberships, digital memberships (e.g. Netflix, Amazon Prime), or landscaping. These services have recently been affected by new taxes in other states. This law will prohibit implementation of new taxes to expand the tax base in Arizona.

Florida Amendment 5

Similar to Arizona’s recently passed proposition, Florida Amendment 5, “Two-Thirds Vote of Legislature to Increase Taxes or Fees”, passed overwhelmingly with 65.7% of the vote. The new law makes it much more difficult for the state to implement new tax increases, requiring a two thirds majority in the legislature to increase taxes or fees from their current levels.

Nevada Question 2

Nevada’s Question 2 provides a sales tax exemption for feminine hygiene products and passed with 56.5% of the vote to 43.5%. The new law now makes these products, such as tampons, exempt from state and local sales taxes.

North Carolina Income Tax Amendment

North Carolina’s Income Tax Amendment proposal passed with 57% of the vote and will reduce the maximum allowable income tax rate from 10 percent to 7 percent. The state currently has a flat tax of 5.499 percent, so this is most likely to affect municipalities that might otherwise have additional taxes and would limit future tax increases at the state level.

Ballot Measures that Did Not Pass

The following ballot measures did not pass in their states, representing a number of different types of tax issues:

  • Washington Initiative 1631 – This Carbon Emissions Fee Measure failed with only 43.5% of the vote.
  • California Proposition 6 – This would have repealed the 2017 12 cent per gallon tax increase but failed with only 44% of the vote.
  • Colorado Proposition 110 – Colorado residents voted down this initiative to increase the sales tax rate from 2.9 percent to 3.52 percent over the next two years to cover the cost of new transportation projects. It only garnered 40% support.
  • Colorado Amendment 73 – Colorado’s amendment to income tax would have changed their flat tax of 4.63 percent to a bracketed system with tax increases for those making more than $150,000 to fund education initiatives. It failed with only 45.7% of the vote.
  • Missouri Proposition D – This would have increased the per-gallon gas tax over four years by 10 cents per gallon. It failed with only 46% of the vote.
  • North Dakota Measure 3 – North Dakota was also set to vote on marijuana legalization but voted it down by a margin of 19 points.
  • Oregon Measure 103 – Oregon had a similar initiative to Washington to stop future taxes on groceries by local governments, but it failed with only 42.5% of the vote.
  • Montana I-185 – In a close vote, Montana residents declined an initiative to extend Medicaid expansion and increase tobacco taxes.
  • South Dakota Measure 25 – South Dakota’s measure to increase tobacco taxes also failed with 45% of the vote in favor.
  • Maine Question 1 – Maine residents turned down an initiative to increase taxes on income over the social security contribution limit to fund the creation of a home health-care system for disabled and elderly residents.
  • Oregon Measure 104 – This would have required a supermajority moving forward for any new bills that included tax deductions, credits or exemptions. It only received 34.7% of the vote.

A range of new measures were passed, but more than the average number were rejected by voters in this year’s midterms, most of them by relatively close margins, showing the divisive nature of anything that changes the status quo for state and local taxes.

The post Midterm Tax Measure Results for 2018 appeared first on AccurateTax.com.

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Important Sales Tax Dates for November 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-november-2018/ Tue, 30 Oct 2018 17:21:11 +0000 https://www.accuratetax.com/?p=5367 sales tax due dates november 2018

Gobble, gobble, gobble! November is here, so whether you’re breaking out your turkey pants or celebrating new facial hair for Movember, chances are something fun is happening. In the midst of cooler weather and family get-togethers, there are still sales tax filings to be done. Don’t worry; we’re here to help. You’ll find sales tax due dates for each state below. So get your returns ready so you can focus on more fun activities, like eating that Thanksgiving feast! * Normal date falls on a weekend or holiday Alabama Monthly Taxes Due 11/20 Arizona Monthly Taxes Due 11/20 Arkansas Monthly... Read More

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sales tax due dates november 2018

Gobble, gobble, gobble! November is here, so whether you’re breaking out your turkey pants or celebrating new facial hair for Movember, chances are something fun is happening. In the midst of cooler weather and family get-togethers, there are still sales tax filings to be done. Don’t worry; we’re here to help. You’ll find sales tax due dates for each state below. So get your returns ready so you can focus on more fun activities, like eating that Thanksgiving feast!

* Normal date falls on a weekend or holiday

Alabama
Alabama
Monthly Taxes Due 11/20
Arizona
Arizona
Monthly Taxes Due 11/20
Arkansas
Arkansas
Monthly Taxes Due 11/20
California
California
Monthly Taxes Due 11/30
Colorado
Colorado
Monthly Taxes Due 11/20
Connecticut
Connecticut
Monthly Taxes Due 11/30
District of Columbia
District of Columbia
Monthly Taxes Due 11/20
Florida
Florida
Monthly Taxes Due 11/1 (Late after 11/20)
Georgia
Georgia
Monthly Taxes Due 11/20
Hawaii
Hawaii
Monthly Taxes Due 11/20
Idaho
Idaho
Monthly Taxes Due 11/20
Illinois
Illinois
Monthly Taxes Due 11/20
Indiana
Indiana
Monthly Taxes Due 11/20 if amount owed is over $1000
11/30 if amount owed is $1000 or less
Iowa
Iowa
Monthly Taxes Due 11/20
Semi-Monthly Taxes Due 11/12
11/26 *
Kansas
Kansas
Monthly Taxes Due 11/26 *
Kentucky
Kentucky
Monthly Taxes Due 11/20
Louisiana
Louisiana
Monthly Taxes Due 11/20
Maine
Maine
Monthly Taxes Due 11/15
Maryland
Maryland
Monthly Taxes Due 11/20
Massachusetts
Massachusetts
Monthly Taxes Due 11/20
Michigan
Michigan
Monthly Taxes Due 11/20
Minnesota
Minnesota
Monthly Taxes Due 11/20
Mississippi
Mississippi
Monthly Taxes Due 11/20
Missouri
Missouri
Monthly Taxes Due 11/20
Quarter-Monthly Taxes Due 11/5 (for last quarter-month of October), 11/12, 11/19, 11/26 *
Nebraska
Nebraska
Monthly Taxes Due 11/20
Nevada
Nevada
Monthly Taxes Due 11/30
New Jersey
New Jersey
Monthly Taxes Due 11/20
New Mexico
New Mexico
Monthly Taxes Due 11/26 *
New York
New York
Monthly Taxes Due 11/20
North Carolina
North Carolina
Monthly Taxes Due 11/20
North Dakota
North Dakota
Monthly Taxes Due 11/30
Ohio
Ohio
Monthly Taxes Due 11/23
Oklahoma
Oklahoma
Monthly Taxes Due 11/20
Pennsylvania
Pennsylvania
Monthly Taxes Due 11/20
Rhode Island
Rhode Island
Monthly Taxes Due 11/20
South Carolina
South Carolina
Monthly Taxes Due 11/20
South Dakota
South Dakota
Monthly Taxes Due 11/20
Tennessee
Tennessee
Monthly Taxes Due 11/20
Texas
Texas
Monthly Taxes Due 11/20
Utah
Utah
Monthly Taxes Due 11/30
Vermont
Vermont
Monthly Taxes Due 11/26 *
Virginia
Virginia
Monthly Taxes Due 11/20
Washington
Washington
Monthly Taxes Due 11/26 *
West Virginia
West Virginia
Monthly Taxes Due 11/20
Wisconsin
Wisconsin
Monthly Taxes Due 11/30
Wyoming
Wyoming
Monthly Taxes Due 11/30

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Surviving a Sales Tax Audit https://www.accuratetax.com/blog/surviving-a-sales-tax-audit/ Tue, 09 Oct 2018 13:04:45 +0000 https://www.accuratetax.com/?p=5354

There are few five letter words feared by small business owners as much as “audit”. Especially for business owners who have been careful in their processes, recording all sales, logging everything, and maybe occasionally forgetting to document something, it’s frustrating and terrifying to get that notice. But with the right preparation, and a keen understanding of why sales tax and use tax audits occur, and how to prepare for and address them, you can tackle the issue with hopefully a bit less stress. While avoiding a sales tax audit completely is ideal, having a good plan in place can help... Read More

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There are few five letter words feared by small business owners as much as “audit”. Especially for business owners who have been careful in their processes, recording all sales, logging everything, and maybe occasionally forgetting to document something, it’s frustrating and terrifying to get that notice.

But with the right preparation, and a keen understanding of why sales tax and use tax audits occur, and how to prepare for and address them, you can tackle the issue with hopefully a bit less stress. While avoiding a sales tax audit completely is ideal, having a good plan in place can help if one ever arises.

Why Are You Being Audited?

This is the big question – what exactly triggers a sales tax audit in the first place. As referenced in our recent article on avoiding an audit, there are a lot of factors – some in your control and some not:

  • Industry – Certain industries are audited more often than others, and it can vary depending on the state.
  • A Vendor or Supplier is Audited – While outside your control, the behavior of someone you work with can trigger an audit, especially if they have been audited and are found to be out of compliance.
  • Review of Records – There are several triggers when reviewing your records that could lead to an audit. With more advanced technology, computers can analyze factors like perceived physical location, the format and frequency of your records, being late in your filing and other red flags that might lead to an audit.
  • Prior Productive Status – Most states will evaluate your sales tax liability year over year. If your account yields an adjustment of more than a certain amount from prior audits, you’re likely to be audited again in the future.
  • Business Format – Sole proprietors are audited more frequently than other business types, so it’s recommended that, if you are being audited regularly, you consider forming a corporation or limited liability company.
  • Randomness – While there are some companies that undergo audits regularly and must always be ready for them, others are selected at random. It’s difficult to know when or why this happens.

Of the above, only one item is truly within your control. In many industries and states, an audit is inevitable, so the best thing you can do is prepare for it and have the right records and processes in place to ensure you aren’t found out of compliance.

What to Do After Being Notified

If you’ve been notified of an impending audit, there are several steps you should take immediately, including:

  1. Gathering Your Records – Start by collecting your records so they are in hand when the time for your audit arrives. State auditors will provide a list of items they need in your notice, but common records include a general ledger, sales and purchase journals and invoices, journal entries, depreciation schedules, resale and exemption certificates, federal tax returns, financial statements, shipping documentation, sales and use tax returns, and bank statements.
  2. Review Your Records – Don’t just collect and wait. Spend time checking your records for accuracy and completeness. Any gaps in the records should be filled before sharing documents with the auditor. This can take time, so don’t procrastinate if you can avoid it.
  3. Address Systematic Issues – If there are any major changes or issues in your records, now is the time to address them. Information can get lost or improperly formatted when there’s a change in accounting systems, shift in how you maintain your taxes, if records are moved or lost, or if there are electronic records unaccounted for (such as EDI or ERS). The auditor needs to be able to trace and evaluate all records and these types of issues will make that difficult.

Handling the Audit Process

Once an audit is initiated and you’ve started to gather and review your records, take the time to prepare for what the auditor will look for and expect from you. Even if you normally do your taxes yourself, connect with a CPA who can provide support and insight into the process and help you ensure your records are in order.

Some other items to keep in mind include:

  • Check if a reverse audit is necessary – Auditors won’t be checking for overpayments, so this may be a good time to ensure you haven’t in fact over paid.
  • Identify external representation early – If you suspect you may owe a liability when the audit is completed and want an external representative to assist you, retain their services early to avoid any issues mid-or-post audit.
  • Coordinate with the Right Representative – When looking for third party assistance, make sure you hire someone who has background in your industry and with sales tax audits in your location. This will help them identify potential unnecessary requests from the auditor, or issues you may overlook when evaluating your records.

Once you’ve undergone the audit, your auditor will propose an assessment in an exit conference. This may be presented in person or mailed to you, and will include a summary of what the auditor believes you owe the state. As long as you agree, the next step is to pay the liability and close out the audit. If you do not agree, however, additional steps must be made to appeal it, and in most cases you only have 30 days to do so.

The audit process is lengthy, stressful, and can be resource intensive, especially if your records were not as organized and prepared as they needed to be. Whether you’ve just faced an audit, are preparing for one, or are worried about the risk of one in the future, now is the perfect time to step back and evaluate how best to better organize your business processes to better prepare for future audits.

The post Surviving a Sales Tax Audit appeared first on AccurateTax.com.

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Important Sales Tax Dates for October 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-for-october-2018/ Sun, 30 Sep 2018 13:07:34 +0000 https://www.accuratetax.com/?p=5359 sales tax dates October 2018

It’s October, the month of Halloween! But before you go trick-or-treating, make sure you file your sales tax returns, or it’s going to be a very scary holiday indeed! Filing a timely sales tax return is a great way to avoid a sales tax audit, something that can be both costly and time-consuming for your business. So take a few moments at the start of the month to make sure your commitments are scheduled by the due dates listed below. * Normal date falls on a weekend or holiday Alabama Quarterly Taxes Due 10/22 * Monthly Taxes Due 10/22 *... Read More

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sales tax dates October 2018

It’s October, the month of Halloween! But before you go trick-or-treating, make sure you file your sales tax returns, or it’s going to be a very scary holiday indeed! Filing a timely sales tax return is a great way to avoid a sales tax audit, something that can be both costly and time-consuming for your business. So take a few moments at the start of the month to make sure your commitments are scheduled by the due dates listed below.

* Normal date falls on a weekend or holiday
Alabama
Alabama
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Arizona
Arizona
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Arkansas
Arkansas
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
California
California
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Colorado
Colorado
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Connecticut
Connecticut
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
District of Columbia
District of Columbia
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Florida
Florida
Quarterly Taxes Due 10/1 (Late after 10/22 *)
Monthly Taxes Due 10/1 (Late after 10/22 *)
Georgia
Georgia
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Hawaii
Hawaii
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Idaho
Idaho
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Illinois
Illinois
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Indiana
Indiana
Quarterly Taxes Due 10/22 * if amount owed is over $1000
10/31 if amount owed is $1000 or less
Iowa
Iowa
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Semi-Monthly Taxes Due 10/10
10/25
Kansas
Kansas
Quarterly Taxes Due 10/25
Monthly Taxes Due 10/25
Kentucky
Kentucky
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Louisiana
Louisiana
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Maine
Maine
Quarterly Taxes Due 10/15
Monthly Taxes Due 10/15
Maryland
Maryland
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Massachusetts
Massachusetts
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Michigan
Michigan
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Minnesota
Minnesota
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Mississippi
Mississippi
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Missouri
Missouri
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Quarter-Monthly Taxes Due 10/3 (for last quarter-month of September), 10/10, 10/18, 10/25
Nebraska
Nebraska
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Nevada
Nevada
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
New Jersey
New Jersey
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
New Mexico
New Mexico
Quarterly Taxes Due 10/25
Monthly Taxes Due 10/25
New York
New York
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
North Carolina
North Carolina
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/22 *
North Dakota
North Dakota
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Ohio
Ohio
Monthly Taxes Due 10/23
Oklahoma
Oklahoma
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Pennsylvania
Pennsylvania
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Rhode Island
Rhode Island
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/22 *
South Carolina
South Carolina
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
South Dakota
South Dakota
Monthly Taxes Due 10/22 *
Tennessee
Tennessee
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Texas
Texas
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Utah
Utah
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Vermont
Vermont
Quarterly Taxes Due 10/25
Monthly Taxes Due 10/25
Virginia
Virginia
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Washington
Washington
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/25
West Virginia
West Virginia
Quarterly Taxes Due 10/22 *
Monthly Taxes Due 10/22 *
Wisconsin
Wisconsin
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31
Wyoming
Wyoming
Quarterly Taxes Due 10/31
Monthly Taxes Due 10/31

The post Important Sales Tax Dates for October 2018 appeared first on AccurateTax.com.

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How the Wayfair Decision Creates Extra Burden in NOMAD States https://www.accuratetax.com/blog/how-the-wayfair-decision-creates-extra-burden-in-nomad-states/ Fri, 07 Sep 2018 12:52:04 +0000 https://www.accuratetax.com/?p=5344 How the Wayfair Decision Creates Extra Burden in NOMAD States

For the 45 out of 50 states that have some form of sales tax, the June Supreme Court decision in South Dakota v. Wayfair, Inc. was a watershed moment – overturning more than 25 years of precedent that kept them from collecting sales tax on online sales from out of state. The original Quill ruling made it so that only companies with a physical presence, or nexus, in the state could be tasked with collecting sales tax on in-state sales. By overturning this ruling and opening the floodgates to states like South Dakota (and more than a dozen others) who... Read More

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How the Wayfair Decision Creates Extra Burden in NOMAD States

For the 45 out of 50 states that have some form of sales tax, the June Supreme Court decision in South Dakota v. Wayfair, Inc. was a watershed moment – overturning more than 25 years of precedent that kept them from collecting sales tax on online sales from out of state.

The original Quill ruling made it so that only companies with a physical presence, or nexus, in the state could be tasked with collecting sales tax on in-state sales. By overturning this ruling and opening the floodgates to states like South Dakota (and more than a dozen others) who have implemented new laws to collect those taxes, the dynamic has shifted. In no place is this more apparent than in NOMAD states that don’t currently collect sales tax.

Retailers in New Positions to Think About Sales Tax

There are currently five states that don’t collect any type of sales tax (Oregon, New Hampshire, Alaska, Delaware, and Montana), and retailers in those states have never been expected to think about sales tax or make it part of their business processes. These 5 states are collectively known as the NOMAD states, from the first letter of their names.

The issue hit hard in June, with states like New Hampshire taking almost immediate action to address it. Governor Chris Sununu called for a special legislative session in the attempt to pass new bills that would require new approval processes for collecting sales tax in New Hampshire, which currently has no processes in place to do so. Additionally, legislation has been introduced this summer by senators from New Hampshire and Oregon to overturn and circumvent the Supreme Court ruling, citing state’s rights.

Whether these efforts work or not remains to be seen, but the impact on the retailers in these states is real, as they will now be responsible for collecting and remitting taxes in other states when they were never before expected to do so.

Shoppers Paying Sales Tax for the First Time

While Wayfair impacts businesses selling from NOMAD states to those that do collect sales taxes, there are other situations in which sales tax is being charged by states to residents and shoppers in these states. New laws in states like Florida, for example, require that any goods shipped into the state directly after purchase, even if purchased in another state, are subject to Florida State sales taxes.

The concern for residents and visitors is that NOMAD states lose the advantage they long had for not having a sales tax. People would cross state boundaries and purchase items in these states to leverage the lower overall cost. That said, even as they pursue new legislation to address these changes, the law was always clear. If you purchase an item and bring it back home with you to a state with sales tax, you are liable for the use tax on that item.

The difference is that under older laws, this was nearly impossible to enforce, with only 2% of people accurately filing and paying the use tax they owed. New laws, the Wayfair decision, and creative implementations of tax collection are addressing this in ways that will impact NOMAD states, who must now figure out what options they have.

The post How the Wayfair Decision Creates Extra Burden in NOMAD States appeared first on AccurateTax.com.

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Important Sales Tax Dates for September 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-september-2018/ Thu, 30 Aug 2018 13:52:42 +0000 https://www.accuratetax.com/?p=5336 Important Sales Tax Dates for September 2018

Ecommerce retailers are starting to get busier and busier as the fourth quarter approaches. It’s not quite fall yet, but many of us are already thinking about the holiday selling season. September is not a huge month for sales tax due dates, other than those who must file monthly (or more frequently). New York does have quarterly taxes due as well. Make sure to check the dates below and make sure to file your business’s sales tax return in a timely manner. * Normal date falls on a weekend or holiday Alabama Monthly Taxes Due 9/20 Arizona Monthly Taxes Due... Read More

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Important Sales Tax Dates for September 2018

Ecommerce retailers are starting to get busier and busier as the fourth quarter approaches. It’s not quite fall yet, but many of us are already thinking about the holiday selling season. September is not a huge month for sales tax due dates, other than those who must file monthly (or more frequently). New York does have quarterly taxes due as well. Make sure to check the dates below and make sure to file your business’s sales tax return in a timely manner.

* Normal date falls on a weekend or holiday

Alabama
Alabama
Monthly Taxes Due 9/20
Arizona
Arizona
Monthly Taxes Due 9/20
Arkansas
Arkansas
Monthly Taxes Due 9/20
California
California
Monthly Taxes Due 10/1 *
Colorado
Colorado
Monthly Taxes Due 9/20
Connecticut
Connecticut
Monthly Taxes Due 10/1 *
District of Columbia
District of Columbia
Monthly Taxes Due 9/20
Florida
Florida
Monthly Taxes Due 9/3 * (Late after 9/20)
Georgia
Georgia
Monthly Taxes Due 9/20
Hawaii
Hawaii
Monthly Taxes Due 9/20
Idaho
Idaho
Monthly Taxes Due 9/20
Illinois
Illinois
Monthly Taxes Due 9/20
Indiana
Indiana
Monthly Taxes Due 9/20 if amount owed is over $1000
10/1 * if amount owed is $1000 or less
Iowa
Iowa
Monthly Taxes Due 9/20
Semi-Monthly Taxes Due 9/10
9/25
Kansas
Kansas
Monthly Taxes Due 9/25
Kentucky
Kentucky
Monthly Taxes Due 9/20
Louisiana
Louisiana
Monthly Taxes Due 9/20
Maine
Maine
Monthly Taxes Due 9/17 *
Maryland
Maryland
Monthly Taxes Due 9/20
Massachusetts
Massachusetts
Monthly Taxes Due 9/20
Michigan
Michigan
Monthly Taxes Due 9/20
Minnesota
Minnesota
Monthly Taxes Due 9/20
Mississippi
Mississippi
Monthly Taxes Due 9/20
Missouri
Missouri
Monthly Taxes Due 9/20
Quarter-Monthly Taxes Due 9/3 (for last quarter-month of August), 9/10, 9/18, 9/25
Nebraska
Nebraska
Monthly Taxes Due 9/20
Nevada
Nevada
Monthly Taxes Due 10/1 *
New Jersey
New Jersey
Monthly Taxes Due 9/20
New Mexico
New Mexico
Monthly Taxes Due 9/25
New York
New York
Quarterly Taxes Due 9/20
Monthly Taxes Due 9/20
North Carolina
North Carolina
Monthly Taxes Due 9/20
North Dakota
North Dakota
Monthly Taxes Due 10/1 *
Ohio
Ohio
Monthly Taxes Due 9/24 *
Oklahoma
Oklahoma
Monthly Taxes Due 9/20
Pennsylvania
Pennsylvania
Monthly Taxes Due 9/20
Rhode Island
Rhode Island
Monthly Taxes Due 9/20
South Carolina
South Carolina
Monthly Taxes Due 9/20
South Dakota
South Dakota
Monthly Taxes Due 9/20
Tennessee
Tennessee
Monthly Taxes Due 9/20
Texas
Texas
Monthly Taxes Due 9/20
Utah
Utah
Monthly Taxes Due 10/1 *
Vermont
Vermont
Monthly Taxes Due 9/25
Virginia
Virginia
Monthly Taxes Due 9/20
Washington
Washington
Monthly Taxes Due 9/25
West Virginia
West Virginia
Monthly Taxes Due 9/20
Wisconsin
Wisconsin
Monthly Taxes Due 10/1 *
Wyoming
Wyoming
Monthly Taxes Due 10/1 *

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Why Wayfair Isn’t Really a New Tax https://www.accuratetax.com/blog/why-wayfair-isnt-really-a-new-tax/ Wed, 29 Aug 2018 20:38:30 +0000 https://www.accuratetax.com/?p=5327 Why Wayfair Isn’t Really a New Tax

The biggest news in online commerce this year was the June 5-4 decision by the US Supreme Court that overturned the 1992 ruling in Quill v. North Dakota. That previous ruling effectively made it impossible for states to collect sales tax from businesses that did not have a physical presence within their borders. The case, South Dakota v. Wayfair, was a bellwether against which many other states will now measure and adjust their sales tax policies, some of which have already been passed into law and were merely waiting for this decision. But there’s been a consistent habit in media... Read More

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Why Wayfair Isn’t Really a New Tax

The biggest news in online commerce this year was the June 5-4 decision by the US Supreme Court that overturned the 1992 ruling in Quill v. North Dakota. That previous ruling effectively made it impossible for states to collect sales tax from businesses that did not have a physical presence within their borders.

The case, South Dakota v. Wayfair, was a bellwether against which many other states will now measure and adjust their sales tax policies, some of which have already been passed into law and were merely waiting for this decision. But there’s been a consistent habit in media reports to describe this as a new tax, or as the Supreme Court giving states the permission to pass new taxes that will directly impact online businesses. In reality, Wayfair is more of an adjustment to who will pay an already existing tax in many of these states and the implications are far reaching.

Online Sales Tax Before Wayfair

Before the Supreme Court’s recent ruling, online retailers were effectively exempt from collecting sales tax in any state where they did not have a physical presence. While eCommerce has been around for more than 20 years, it is only in the last decade that it has grown to represent a significant percentage of the economy, with Amazon processing hundreds of billions of dollars in orders every year. For companies that did not have nexus in all fifty states (which very few do), that meant states were unable to require them to collect sales tax on orders through their sites.

This applied to many major retailers, including Amazon for states in which they did not have fulfillment centers, eBay’s network of individuals and small businesses, and in the case of this particular legal case, the trio of Wayfair, Overstock and Newegg, which all resisted a new law that was passed in South Dakota last year. That new law would have shifted the onus to retailers with more than $100,000 in sales or 200+ transactions to collect the 4.5% sales tax levied by the state.


In the 27 states that charge use tax, only 2% of taxpayers actually report it.
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The tricky part of this situation is that this is not a new tax. The 4.5% sales tax that South Dakota charged (and many other states charge at comparable levels), always existed. The difference is that the company selling the goods was not required to collect it, unlike in the case of brick and mortar retailers who do collect it on the state’s behalf. In those cases, it fell to the consumer to report their use tax and pay it independently.

If the tax was still being charged, what was the problem then? In the 27 states that have a use tax line item in their returns, only 2% of taxpayers actually report it. Only in rare cases, such as the purchase of a car or truck across state lines is use tax enforced proactively. That meant billions of dollars in tax revenue shortfall as consumers started to buy almost everything online, from books and movies to paper towels and diapers.

Shifting the Legal Burden from Shoppers to Retailers

This relationship is not new. Already in all but five states (Alaska, Delaware, Montana, New Hampshire, and Oregon), brick and mortar retailers were required to collect sales tax on purchases by their consumers and submit it to the state in regular payments. The difference now is that these same states are now permitted to enforce online retailers to do the same, regardless of where they do business.

For states it is a major win, allowing them to recapture the billions in lost revenue, but for retailers, it represents a new technology and financial burden as they work to address the nearly 10,000 unique taxing jurisdictions in the US. For major companies like Amazon, this is not an issue (as they’ve already made this transition), but for small companies and those without significant resources, it represents a challenge that will require outside support and new technology solutions. The challenge is real, but the result of the court case is not entirely unexpected as it represents an adjustment of the status quo to address very real advancements in how we use the Internet as part of our daily lives.

The post Why Wayfair Isn’t Really a New Tax appeared first on AccurateTax.com.

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Selecting the Right Business Structure for Your Small Online Business https://www.accuratetax.com/blog/selecting-the-right-business-structure-for-your-small-online-business/ Tue, 21 Aug 2018 13:03:51 +0000 https://www.accuratetax.com/?p=5304 business structure for online small business

Few decisions will have as big of an impact on the taxes you pay and regulations you must follow as the business structure of your online company. When starting an online business, you should strongly consider consulting with a lawyer for advice as to the best structure. However, you can do some in-depth research beforehand on the topic to get a better feel for the options. Remember, the following information is not to replace legal advice, merely to help you better understand your options in advance of the decision making process. Sole Proprietorship Many small online businesses opt for a... Read More

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business structure for online small business

Few decisions will have as big of an impact on the taxes you pay and regulations you must follow as the business structure of your online company. When starting an online business, you should strongly consider consulting with a lawyer for advice as to the best structure. However, you can do some in-depth research beforehand on the topic to get a better feel for the options.

Remember, the following information is not to replace legal advice, merely to help you better understand your options in advance of the decision making process.

Sole Proprietorship

Many small online businesses opt for a sole proprietorship as this is the simplest of the business structure options. Typically, this involves a single person who owns and operates the business. Since your expenses and business income go on Form 1040 of your personal income tax return, and profits and losses on Schedule C, this particular structure has some tax benefits.

Because of the way the Schedule C incorporates into your personal tax return, business losses can offset other earned income. Sole proprietors must also file Schedule SE and self-employment tax, and they need to make payments of estimated tax if they owe a minimum of $1,000 in federal taxes.

Sole proprietorship comes with a few disadvantages as well, including the fact that you have 100 percent responsibility for any liabilities related to the company. As a result, it puts your assets at risk. It can also make it more difficult to secure business loans, meaning you would likely need to depend on your savings or home equity.

Corporation

Corporations are independent legal entities fully separate from owners. Because of this, there are additional tax requirements and regulations. With liability protection, an owner has no responsibility for the debt of the corporation, giving this business structure a significant advantage over others. Corporations also have an easier time raising money through the sale of stock. It is even possible for corporations to continue indefinitely.

The biggest downside of a Corp business structure is the high cost and the legal complications involved. Keep in mind that every state has its unique laws and regulations. As such, you will likely need to hire an attorney to create your corporation. You also need professional tax preparation and auditing services to meet the regulations. It is also important to note that, if your corporation is small and you are the sole owner, you may pay additional taxes on your earnings – once as corporate income and again as personal income on your own taxes.

S-Corp

S-Corps or S corporations are better for small businesses that corporations, whether online or brick and mortar. This comes from the combination of liability protection and some tax benefits. With the S-corp business structure, losses and income end up on shareholders’ individual tax returns, meaning there is no double payment of taxes as with corporations. S corporations without inventory can even opt for the simpler cash accounting method. Because S corporations can have up to 100 shareholders, it is easier to secure capital.

In terms of downsides, S-corps have many of the same regulations and laws as corporations, meaning higher costs for legal and tax preparation fees. They also require minute taking, shareholder voting, director and shareholder meetings, and incorporation article filing.

Limited Liability Company (LLC)

Limited liability companies have only recently become popular among small business owners and entrepreneurs. This business structure combines the benefits of corporations with partnerships. LLCs provide liability protection without double taxation. Additionally, losses and earnings go on the owners’ personal tax returns. The big difference between an S-corp and LLC is in benefits. With LLCs, there is no limit for the number of shareholders, and all members or owners can have full participatory roles.

It is important to note that LLCs do not include perpetual statuses, with some states having a limit of 30 years. Because of variations in how states treat LLCs, ecommerce platforms operating in more than one state may find them somewhat complicated. If you choose to use an LLC, you need to hire an experienced accountant, someone familiar with the unique regulations related to this business structure.

Choosing the Right Structure

The business structure you select for your online business will impact everything from taxes to how financial losses can impact your life. Each business structure has a unique set of advantages and disadvantages. Choose the one that works best for your specific company.

The post Selecting the Right Business Structure for Your Small Online Business appeared first on AccurateTax.com.

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How to Avoid Misclassification of Your Ecommerce Products for Sales Tax Purposes https://www.accuratetax.com/blog/how-to-avoid-misclassification-of-your-ecommerce-products-for-sales-tax-purposes/ Thu, 16 Aug 2018 12:45:38 +0000 https://www.accuratetax.com/?p=5297 sales tax product classification

One of the most complicated aspects of a small business to navigate is taxes, including sales tax. Increasing this challenge is the fact that different types of products each have unique sales tax rates depending on their classification. This is why many ecommerce companies have misclassified products that lead to incorrect sales tax calculations. Here are some reasons why and what you can do about it. Potential Complications of Misclassification Companies that misclassify their products and charge the incorrect sales tax may face customer complaints and serious problems if an audit occurs. It can also result in time-consuming efforts to... Read More

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sales tax product classification

One of the most complicated aspects of a small business to navigate is taxes, including sales tax. Increasing this challenge is the fact that different types of products each have unique sales tax rates depending on their classification. This is why many ecommerce companies have misclassified products that lead to incorrect sales tax calculations. Here are some reasons why and what you can do about it.

Potential Complications of Misclassification

Companies that misclassify their products and charge the incorrect sales tax may face customer complaints and serious problems if an audit occurs. It can also result in time-consuming efforts to recalculate the additional sales taxes owed. Whether the problems that arise are with the tax authority or customers, they can be costly

With the potential complications of misclassification in mind, take a closer look at some of the most common classification categories and the likely problems that arise within each of them.

Frequently Exempt Classifications

Although every state has slightly different rules for sales tax, there are common themes when it comes to exemptions. Many of these exemptions do not apply to the typical ecommerce website, although you should be aware of them in case they are relevant for your small business. Common exemptions include:

  • Products for resale, such as inventory
  • Raw materials for resale
  • Intangible property, such as software
  • Agricultural products
  • Prescription drugs
  • Food, particularly unprepared items

For example, in Connecticut footwear under $50 is tax exempt, as is certain computer hardware sold to teachers in Ohio. Despite these specific situations, it is more common to have services exempt from taxation than goods. While the most exempted services include medical care and legal support, it is rare for an ecommerce store to have service-related exemptions.

Clothing

Clothing is a gray area that changes not only in each state, but also at different times of the year. You must first determine if your state takes part in the Streamlined Sales and Use Tax Agreement (SST), making clothing either exempt or taxable. This agreement includes strict definitions for clothing.

SST member states provide an advantage since they must have a taxability matrix that outlines the treatment of clothing and related items. In the case of states where clothing sales are not exempt, look for special taxation rules related to specific accessories or clothing, including recreational or luxury clothing. Some of the non-SST member states that exempt clothing only up to a specific threshold.

Additional classification complications can occur from phrases like "everyday" clothing that determine whether clothing is taxable or exempt. In this case, an ecommerce store selling sweatpants would have to determine if those are “everyday” clothing or "athletic wear," which are taxable and not taxable, respectively.

Food

As an ecommerce website, you are more likely to sell unprepared food than prepared food, but you should still be aware of the various classifications, as well as sub-classifications. Often, unprepared foods fall in the exempt category while taxes apply to prepared foods. As an ecommerce company instead of a brick-and-mortar, pay attention to specific taxation rules on food items since many of the food-related tax laws focus most on stores with physical addresses.

In some states, this will help you avoid complications. For instance, in Massachusetts, the Department of Revenue charges tax on both pizza and cans of soda at a restaurant if the customer dines in but only on the pizza when dining out.

Luxury Goods

Luxury goods are often subject to special taxes. Items like alcohol, high-end autos, tobacco, and jewelry typically classify as luxury goods. From an ecommerce perspective, it is essential that you recognize whether your product qualifies as a luxury good, as this will increase the tax you collect on it. While many items considered luxury goods meet the definition, not all do.

Ensuring Your Products are Properly Classified

The specific classification of your product directly impacts the amount of taxes you pay on sales. As an ecommerce company, you must be aware of this and take the appropriate precautions to ensure that you classify all your products correctly. Otherwise, you may face a decline in reputation or legal problems in the form of back-taxes due.

The post How to Avoid Misclassification of Your Ecommerce Products for Sales Tax Purposes appeared first on AccurateTax.com.

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