multi-channel sales tax compliance
DESCRIPTION
Multi-Channel Sales Tax Compliance. Tonight’s Topics. “General Rules” of Sales Tax Multi-channel & Multi-state Compliance When to Collect How Much to Collect Here to Help. Quick Intro. Web technology + small business + taxes Previous tax products: FileLater (IRS efile ) - PowerPoint PPT PresentationTRANSCRIPT
Multi-Channel Sales Tax Compliance
Tonight’s Topics• “General Rules” of Sales Tax• Multi-channel & Multi-state Compliance• When to Collect• How Much to Collect• Here to Help
Quick Intro• Web technology + small business +
taxes• Previous tax products:• FileLater (IRS efile)• EasyEstimatedTaxes (Treasury)
• Founder of TaxJar
“General Rules” of Sales Tax
• There are too many rules!• In-state sales = collect and remit sales
tax• Out-of-state sales = not obligated….yet• The definition of out-of-state (a.k.a
nexus) depends on the state
“General Rules” of Sales Tax
• How much to collect depends on various factors
• Filing deadlines usually tied to sales volume
• Some states have discounts for early payment
• All have penalties for late payment• Save everything in case of audit
Moving to Multi-Channel
• Selling items on more than one platform • Some platforms help you collect sales
tax• None help you file or pay• Sales tax is being collected in different
accounts
Impact on Compliance
• Combine and file a single return• Not separate returns per channel
• Most sellers manually combinetransactions in excel
• Adding Amazon = multi-state business
When to Collect
Nexus: When to Collect
• Presence in a state significant enough that you need to collect sales tax in that state
• Collect sales tax from customersand remit to the state
• No presence in a state means youdon’t have to collect
Nexus TypesHome Office Inventory
• Where you live and/or operate your business
• Live in San Jose and sell out of your house
• Collect: CA
• Inventory is in a warehouse
• Live in San Jose with inventory Pennsylvania
• Collect: CA & PA
Collecting The Right Amount
How Much Do I Collect?
• Tax rate usually = state + local + special
• Origin-based state• Tax rate = seller’s location
• Destination-based state• Tax rate = where item is shipped
• California
Sale in TexasIRVING ARCHER CITY
Rate collected: 8.25%• State: 6.25%• Irving: 1.00%• Dallas MTA: 1.00%
Destination-Based: NY
NY’s Guide to Sales Tax in New York State (page 9)
Sale in New YorkSTAMFORD BUFFALO
Rate collected: 8.75%• State: 4.00%• Erie County: 4.75%
Filing in Destination
• Huge pain!• Calculate taxable sales and sales tax
collected by jurisdiction• Gets worse if you’re multi-channel
Ohio eFile
California: We’re Special!
• Technically, neither Origin or Destination• Sales tax rate= state + district tax(es)• District tax only collected on sales in a district
in which you are “engaged in business”• (Pub 44, Page 5)
• Sellers are able to charge 2 different rates• Customers in your district• Customers outside your district• Pub 177
Same District SaleSAN DIEGO CLAIREMONT
Rate collected: 8.00%• State: 7.50%• San Diego County:
0.50%
Out-of-District SaleSANTA CLARA ALAMEDA
Rate collected: 7.50 %
Buyer responsible for local use tax
Collecting on eBay
• Able to collect only one rate• Collect at district rate for everyone• Shoppers complain if rate is too high
• Collect at state rate for everyone• Pay out-of-pocket for in-district sales • Competitive advantage?
Last Thing…
Trying to comply > knowingly not complying
TaxJar: Here to Help• Automatically pulls and organizes
sales and tax data from your accounts
• Creates local jurisdictional reports • Payment reminders• Sales tax expertise
Dashboard
Save for Later
Multi-Channel
California
Texas
New York
Confused Yet?• How do we share AZ stories of how bad it is
but then say it’s not that bad? • Many states will actually answer the phone• Get it in writing!• Use eFile whenever possible