Does your business collect sales tax? If not, should you be? If so, are you in compliance
with state and parish regulations? Unfortunately, there isn’t a “one stop shop” for all
things sales tax. Although sales tax and accounting software can help, you still have to
stay educated and be diligent in your part to insure compliance.
Did you know that nexus allows the state to impose an obligation to collect sales tax on
your business? Basically, if you have sales tax nexus with a state, you are required to
register with the tax authority for that state, collect and remit sales tax, and file sales tax
returns. In the past, nexus relied heavily on your business’s physical location. However,
on June 21, 2018 the US Supreme Court in the case of South Dakota vs. Wayfair, Inc.
overruled the physical presence rule. Since that time, approximately 35 states have
extended their nexus laws. It’s now easier than ever for your business to trigger nexus
in multiple states and harder than ever for you to keep up with the constantly evolving
One way to help stay in compliance is to register through the Streamlines Sales Tax
Registration System (SSTRS). The SSTRS was put in place by state’s in an effort to
simplify and reduce the costs associated with sales tax compliance. Currently, 23 full
member states and one associate member states participate in SSTRS.
Some states require some or all businesses to electronically file and remit sales tax.
Electronic filing may hinge on the overall volume of your sales in the state, or the
amount of an individual return. Since rules vary from state to state, as is usually the
case with sales tax, it’s always advisable to seek advice from the state tax authority or a
trusted tax advisor.
Late payments happen! Just know, late returns and payments can quickly lead to
penalties and interest charges that escalate until paid. They also flag your account,
drawing the attention of auditors. The good news is, some states will actually reward
your business for filing and paying your sales taxes on time. This allows you to keep a
portion of the tax you owe.
Also, be aware that some businesses are required to prepay their sales tax in certain
states. In most cases, the prepayment requirement is based on the amount of tax owed.
However, it can also be applied to sellers of certain products such as tobacco products
and fuel. Prepayments don’t always follow the same filing schedule as traditional sales
tax payments so it’s important to make sure you understand the rules and process for
the particular state you are filing in.
It can be a challenge for any business, regardless of their size, to keep track of all the
sales tax rules, collection, filing, and payment requirements for multiple states. One of
the easiest ways to make sure you get it right is to automate your sales tax compliance.
Contact Betty with SYGNVS today at firstname.lastname@example.org to learn how Sage 100 and
Alavara can help you better manage the sales tax obligation for your business.