You have questions?

Answers to Frequently Asked Questions

• What is sales tax nexus?

  When the term ‘nexus’ is used in conjunction with sales tax, it refers to the connection a taxpayer has with some taxing jurisdiction. In most cases, this connection or nexus is created when the taxpayer has employees or independent contractors working in the taxing state, when the taxpayer owns personal or real property in the taxing state, or when the taxpayer performs services in the taxing state. Having nexus in the taxing state does not automatically mean that the taxpayer has some sort of tax filing or tax collection obligation.

  It simply means that the state taxing authorities can legally obtain information from the business to help the state taxing authorities determine if there is some tax collection obligation. In order for a taxpayer to have a sales tax collection and remittance obligation, it must have both nexus and some taxable activity in the taxing state. Most state statutes do not use the term ‘nexus’ when describing this sort of connection with the state. Rather, they user terms like ‘doing businesses or ‘dealer’, or ‘conducting businesses to describe the types of activities that give the taxing state the right to request information from the business.

• There seems to be some confusing rules about nexus; what is the best rule to apply?

  The U.S. Supreme Court ruled in 1992 that states can only force companies to register and collect sales tax if the taxpayer has a physical presence in the state. As noted above, physical presence does not mean having an office in the state. It means any contact with the state.

  Sending employees or independent contractors into the state for 2 or more days a year can create nexus, having property stored in a warehouse or distribution center can create nexus, performing training or repair services can create nexus. Any physical connection between your business and the taxing state can create nexus. Some states are unhappy with this rule, and are developing their own nexus rules that are based on the amount of sales that occur in a state. These are called economic nexus rules. The courts are currently evaluating these rules. Taxpayers must carefully consider how they want to deal with states that assert these ‘economic nexus’ rules. If a company is audited or assessed tax under these rules, it will cost a considerable amount of money to fight these challenges in court.

• Do I need to send my sales transaction every day for sales tax filings?

  No – your sales transaction data is gathered only once per filing period allowing you to tend to your business’s demands.

• What is Quarterly Prepayment for California filings?

  Prepayments are not like returns, they are simply payments.  CA deems that the quarterly tax liabilities are too large to be made just once per quarter but were eliminating monthly frequencies from their calendars so the Quarterly Prepayment frequency, or basis, was developed.

  • They are literally payments made in advance.
  • If your tax due for Q1 2019 is $10,000.00 each month for a total of $30,000.00 then you would:
    • Prepay $10,000.00 for Jan by Feb 24^th
    • Prepay $10,000.00 for Feb by Mar 24^th
    • When you are filing the return you will take the prepayment credits for Jan and Feb so that it deducts $20,000.00 from your total tax liability for the quarter which will leave you with the remaining $10,000.00 due.

• I have different selling platforms like Amazon, eBay, Shopify, WooCommerce, etc. Do I need to file separate sales tax returns for each platform?

  No – A sale is a sale no matter what the sales channel. Your sales tax license for each state will allow you to report all your sales on a single return and remit any sales tax owed.

• I know how to file sales tax, but can I use your software to calculate my taxes?

  Yes – but please be advised that the support services available to you will be limited to technical assistance only. Any of our service packages provides you with so much more access to our resources and expertise.

• Are states currently enforcing sales tax on out-of-state businesses?

  Yes. States invest significant resources in tracking down and auditing businesses that have nexus in their state and are selling taxable products or performing taxable services in their state. Once a business is contacted for an audit, there is little opportunity to implement liability-minimizing tactics. The only way to minimize exposure and limit the risk is to address these issues aggressively and proactively. States also share information with other states, so it is possible that your company may be contacted by several states over a short period of time concerning an audit

• I am tired running my business and want to close it out? How much is the fee?

  Closing a business is very similar to opening one, it requires a lot of paperwork. We are here to help make the transition a little smoother by closing out any state sales tax accounts for you at a fee of $49 per state.

• What are the filing frequency for each state?

  Each state has different filing frequency: Monthly, Quarterly, and Annually

• I am a start-up and don’t know where to comply sales tax.

  I suggest consult with a state and local tax experts (SALT) – 1 hour or consult with a state and local tax experts (SALT) – 30 minutes for professional advice.