- Online retailers often make mistakes with sales tax that can lead to fines and audits
- A common error is assuming sales tax only needs to be collected in the retailer’s home state
- Nexus, a legal term, determines tax obligations and can be established through physical presence or sales volume
- The 2018 Wayfair ruling allows states to impose sales tax on out-of-state sellers based on economic nexus with specific sales thresholds
- Sales tax rules vary by state, affecting how much tax is collected on different products
- Not all products are taxed equally, and some states exempt items like groceries or prescription drugs
- Digital products may also be subject to sales tax in some states
- Using nexus-checking software or consulting a tax advisor can help determine where a retailer has a tax obligation
- Automating sales tax tracking and reporting can help manage economic nexus and compliance across states
- Tax compliance software can assist in applying correct tax rates based on product categories and state-specific regulations
Source: taxually.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.
