Selling across state lines? You may need to make a destination-based sales tax application. It’s crucial for your business. Here's the lowdown in bite-sized chunks: When it comes to sales tax compliance, a term that can easily leave businesses scratching their heads, is "destination and origin-based sales tax". Because even without a sales tax nexus, businesses may still be required to collect sales tax when selling to clients in destination-sourcing states. If that leaves you confused to no end, read on.

Tax obligations used to be restricted to a business’s physical presence, which boiled down to where its offices were or where it was registered. The digital revolution has fundamentally changed that. The traditional brick-and-mortar approach to a concept like client base is no longer applicable.

What are Tax Exemption Certificates? While you may not necessarily be exempt from paying tax, you may be selling solutions to clients who are. We’ll help you navigate the ins and outs of tax exemption certificates. In a nutshell, when an organization or person acquires a tax certificate of exemption, it allows them to purchase taxable goods or services tax-free. Purchasers apply for exemption certificates and provide them to sellers at checkout counters, for example. What this may mean for you is that if your client is a reseller or exempt organization, there shouldn’t be a sales tax on any transaction.

Thanks to the constant evolution of the digital marketplace, smaller businesses can realize sustainable growth and marketplace facilitator rules have become a pivotal force in the sustainability of that growth. Marketplace facilitator rules ensure ethical practice, enforce fair treatment, and simplify compliance. And still it’s a part of the marketplace landscape that many marketplace sellers do not yet fully understand.

It’s rather fitting to compare US sales tax compliance to a ball of yarn that’s been knotted together and almost impossible to unravel. But unraveling the complexities of multiple state sales tax regulations is precisely what businesses have to do if they want to stay compliant in the USA. And one such complexity that can easily derail a business’s entire sales tax compliance processes is origin-based sales tax sourcing and its impact on sales tax collections.

The physical presence of a business used to be easy to determine. As a result, tax obligations were more straightforward. But amid legislation changes and the digital revolution, a business’s physical presence is no longer as simple as a concrete geographical location.

The physical presence of a business used to be easy to determine. As a result, tax obligations were more straightforward. But amid legislation changes and the digital revolution, a business’s physical presence is no longer as simple as a concrete geographical location. 

When it comes to navigating the complex world of sales tax in the United States, there’s one term that can be a game-changer for your business: "resale certificate." Whether it’s a good or bad “game-changer” depends entirely on your understanding of resale exemption and how you manage tax-free transactions.

What is a Sales Tax Holiday? In a nutshell, a sales tax holiday is exactly that - a break from having to charge sales tax on certain eligible products. During this specific period of time, selected goods are no longer subject to sales tax. These holidays are often an annual event, and many states take part in the sales tax hiatus on specific products in their own way. Typically, states encourage a sales tax holiday to increase consumer spending.

Sales tax reconciliation is an accounting process that assesses whether the sales tax reported and paid to the revenue departments matches the sales tax collected from customers during sales. Put simply, the process places the sales tax liability recorded in a business’s accounting records next to the actual sales tax collected and reconciles the two sets of numbers. It’s a process that makes it easier to identify discrepancies in sales tax matters and assess the accuracy and reliability of sales tax management in a company. Sales tax reconciliation is done in periodic intervals, either monthly, quarterly, or annually, depending on which tax jurisdictions you’re in.

Sales tax reporting, in a nutshell, is the process of creating and maintaining sales tax reports that provide a summarized (but still intricately detailed) overview of the revenue and sales tax collected by a company. These reports are used to help businesses get insights into their tax obligations and the impact it has on their overall revenue. Sales tax reporting also plays a valuable role in sales tax compliance by providing clear records to tax authorities in the states where a company has a sales tax nexus.

Sales tax situsing is the process of determining whether or not a sale is subject to sales tax (and where). In essence, the process concerns finding the ‘situs.’ A situs is essentially the specific location where a taxable event occurs. Determining the sSales tax situsing is the process of determining whether or not a sale is subject to sales tax (and where). In essence, the process concerns finding the ‘situs.’ A situs is essentially the specific location where a taxable event occurs. Determining the situs may seem relatively straightforward in the context of an in-store purchase. However, it gets exponentially more complicated when a transaction involves different locations. Understanding the situs can be important, especially for companies that focus on things like Software-as-a-Service (SaaS). This is because the location of the taxable event may be a little murky. itus may seem relatively straightforward in the context of an in-store purchase.

The Streamlined Sales Tax Project is a multi-state initiative in the United States. It aims to simplify and standardize sales and use tax collection and compliance processes. The project was established to address the complexities and challenges businesses face when dealing with sales tax obligations in multiple states.

Taxable services are where there is the application of sales tax even if a business does not provide a tangible good. It's a common misconception that sales tax does not apply to service providers. This, however, is only sometimes the case. As sales tax legislation has adapted to the modern business world, many states now also impose sales tax and use tax on businesses in the service industry if they're selling services to customers based in the United States. However, it's important to note that each state varies regarding the tax treatment for service providers.

The importance of complying with the sales tax laws in states where you have a nexus is well documented. But what happens when that nexus expires and you no longer meet the criteria that created it in the first place? It all depends on a state’s approach to trailing nexus.

To encourage people to ‘buy local’ and stimulate micro-economies, most states that charge sales taxes also charge a ‘use tax’. In the US, 45 out of 50 states charge sales taxes and, by extension, use taxes. A use tax is a protective mechanism that safeguards retailers from out-of-state retailers who are not required to collect tax.

Sales tax compliance in the USA requires diligence, an in-depth understanding of multiple tax jurisdictions (as well as their often ambiguous regulations), and an unfailing eye for detail. And still, accidents happen and a few key items are overlooked and left unticked on the old sales tax compliance checklist every so often. Because nexus activating activities aren’t always as cut-and-dry as an office or warehouse address. From a salesperson attending a trade show to a company using a more affordable courier just across the state line, a nexus isn’t always created with a bang. And as a result it’s not uncommon for a nexus to sneak in unnoticed. And that’s exactly why we have the benefit of a sales tax voluntary disclosure agreement. When a state discovers that unnoticed nexus before you do, the penalties and tax liabilities can quickly add up to a crippling total. But if a company “comes clean” and acknowledges the sales tax backlog and discrepancies voluntarily, tax authorities are far more forgiving and understanding (in most cases).

Navigating tax laws in the United States can feel like making your way through a labyrinth at times. With separate income tax and sales tax regulations that contradict neighboring state’s laws, feeling lost when it comes to tax compliance is an understandable response. But at least you get to keep your income tax and sales tax compliance separate and manage two complex matters in their own silos. Unless you’re dealing with a state that uses gross receipts tax … which isn’t quite income tax but it’s also not sales tax. It’s more of a combination of both under one compliance banner. A perfect example of this is Washington’s business and occupation (B&O) tax.