- Relying solely on an eCommerce platform for sales tax compliance in the United States may be risky for companies.
- Factors that make sales tax compliance complex include economic nexus, taxability, situs, home rule, and marketplace facilitators.
- Economic nexus thresholds vary by state and change frequently.
- Taxability varies by state and can include both tangible personal property (TPP) and services.
- Situs refers to the location of the transaction or where possession of TPP takes place.
- Home rule states allow local jurisdictions to establish their own sales tax rules.
- Marketplace facilitators, like Amazon, take on the burden of sales tax obligation for sellers on their platform.
- Calculating sales tax requires considering situs, taxability, and tax rates.
- Setting up a filing process involves reconciling rates, invoicing, and maintaining a tax calendar.
- Potential pitfalls include the authenticity of plug-in solutions and the complexity of non-pass-through taxes.
- Sales tax compliance is taken seriously by states and can hold company leaders personally liable for issues.
Source: taxconnex.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
