Do You Need to Collect Sales Tax In Other States?
Ask the Accountant…
Question: I have sales in several states. Do I have to collect sales tax in states other than my own?
Answer: Sales tax has always been a complicated issue, and it was made infinitely more complicated by the Supreme Court ruling in South Dakota v. Wayfair in 2018. The decision means that you must collect, file and remit sales taxes in states if your sales reach certain thresholds, such as number of transactions or dollar volume in a state, even if you don’t have an office or presence in that state. This becomes difficult and expensive on many levels.
The best course is to consult with a sales tax expert to learn what the sales tax requirements would be for your business in the various states in which you make sales. Once you file with a state, they expect you to file a report at whatever interval they designate even if you have no sales during that period. Therefore, it’s best to have expert advice before registering with a state. The states would love to have you collect sales taxes for them, but you might not meet the criteria and it might not be required.
To further complicate matters, sales tax rates and criteria change frequently, so I would advise asking your sales tax expert how often you should check in with him or her to make sure you are up to date.
Please email your questions to Harriet at Ask The Accountant.
QuickBooks Premier and Enterprise can be modified to better serve ad specialty distributors. Harriet Gatter is a QuickBooks ProAdvisor, a former accounting professor and a former ad specialty distributor. She advises ad specialty distributors to use QuickBooks Premier and Enterprise, often in conjunction with other industry-specific software, to manage the complexities of the ad specialty business, with the results being time saved, errors eliminated and an overall accurate accounting of your business. Contact her at firstname.lastname@example.org.