Those selling online may feel confused regarding their responsibility for sales and use tax.
And, it’s completely understandable!
The last two years have included new ideas on how nexus is determined and who is responsible for collecting and remitting tax when nexus is established. For some, these changes could simplify their state and local tax responsibilities. However, for others, compliance with these new laws could be much more complex.
The monumental SCOTUS decision in Wayfair vs South Dakota brought into existence the concept of “Economic Nexus,” which included economic and transactional nexus thresholds for sales into a state. Most of these new laws, passed by nearly every state that imposes a sales tax, became effective within 12 months of the SCOTUS decision. Every taxpayer’s nexus footprint went from having a physical presence to simply making sales into other states. Many felt this was an issue for e-commerce sellers only. However, now the question is not where you or your property is located, but where your customers are located. This means economic nexus is likely an issue for the vast majority of taxpayers! Our advice has been and continues to be that you need a nexus review if you have customers in multiple states.
Marketplace Facilitator Laws
Adding to the confusion, in the last 18 months states have been passing marketplace facilitator laws, requiring marketplace facilitators (Amazon, Walmart, Etsy, Groupon, etc) to collect and remit tax on sales made by 3rd party sellers on their platforms. These laws have not only been passed with different effective dates, they are often adopted by the marketplace facilitators on different timelines as well. This has added confusion for online sellers selling on these platforms, as they try to understand when or if they should be collecting tax, or if they should be registered in some states.
What do I do next?
For some sellers who have sales fulfilled ONLY on a marketplace facilitator platform(s), the answer may be more simple today than it was even 6 months ago. The platform you sell on may be responsible in most (not all) states that have marketplace facilitator laws in place. In fact, you may be registered in too many states, as some states (up to 21) have provided guidance on whether you can close your sales tax account if you only sell on these platforms.
For most sellers, economic nexus laws and marketplace facilitator laws add complexity to their compliance responsibilities. You may be required to remain registered for sales tax, also register for state income tax, and manage tax remittances that are required to be remitted by the seller, and those collected and remitted by the marketplace facilitator.
We stay on top of all of this for you, and offer clear and concise steps that can be taken to ensure compliance and mitigate exposure. We “Start with Nexus,” and determine the taxability of your sales, then we help you understand if you or a marketplace facilitator are responsible for collection and remittance of sales tax by state. Then, we help you understand where you need to be registered, or if you are registered in too many states. We help you get registered or deregistered where appropriate. We support your compliance responsibilities by preparing and filing sales tax returns on your behalf, where we are always a call or email away for any questions or concerns you have.
Let us help you get this right. Peace of mind is a “What’s Next?” call away. Let’s chat.