If you only have a physical presence in one state, no property or employees in any other state, and all your inter-state sales are shipped by common carrier, then you most likely do not have nexus in another state. The term nexus is used in tax law to describe a situation in which a business has a “nexus” or tax presence in a particular state or states. A nexus is basically a connection between a taxing jurisdiction, like a state, and an entity like a business that must collect or pay the tax.
The decision by the Supreme Court of the United States on June 21, 2018 with regard to the South Dakota v. Wayfair, Inc. case now allows states to tax remote sellers.
What does that mean for you? Now economic nexus can trigger a sales tax and your responsibility to charge and collect from your customer, and remit the tax to the appropriate state(s).
Each state has its own rules, but most have adopted the test of $100,000 in annual sales or 200 or more separate transactions within a calendar year. If your company has internet/remote sales, it is imperative that you track both the dollar volume and the number of transactions by state. Filing sales tax returns and collecting sales taxes will be triggered in most states based upon these guidelines.
KRD’s professionals can assist you with the analysis, state registrations and filing of sales tax returns. Contact us today to learn more.