More and more states are requiring out-of-state retailers to collect sales tax. In the past, most states did not require multi-state online retailers to collect sales tax unless they had a significant physical presence within that state, known as nexus. Nexus refers to a “physical presence” and determines whether a business is subject to collecting and remitting sales taxes for sales within that state. Laws vary from state to state, but most define nexus as an office, warehouse or employee living in that state, but the definition can be broader. As the sales tax landscape continues to change, and states broaden the definition of nexus, it is more important than ever for a business to stay on top of current sales tax legislation at both the state and federal levels.
Some of the statutes you should pay close attention to are:
- Amazon Laws – Many states enacted Amazon laws to require more multi-state online retailers to collect sales tax for the first time. These laws expanded definitions of nexus to include online-specific relationships such as affiliate and web advertising.
- Affiliate and Related Entity Nexus – Affiliate nexus describes a type of relationship between an out-of-state seller and its in-state affiliate that triggers a nexus obligation.
- Click-Through Nexus – Aimed at multi-state retailers that use web advertising—when a buyer clicks through an ad on a local site to a remote ecommerce site.
- Consumer Use Notification – Some Amazon laws also include a consumer use tax notification component, which requires vendors to notify consumers of their use tax obligations and/or to report in-state sales to revenue authorities.
- Marketplace Fairness 2013 – In May, the Senate passed the Marketplace Fairness Act of 2013. If the bill becomes law, it would give states the authority to require remote retailers, such as online sellers, to collect sales tax, some within 180 days of the bill’s passage.
Is it the end of nexus as we know it? Download the white paper, The End of Nexus & Other Sales Tax Compliance Challenges, to learn more about the current sales tax changes that are redefining nexus.
One thing is clear…businesses can no longer assume that just because they do not have nexus in a state, they are free from sales tax obligations. As the sales tax landscape changes, chances are that these changes will affect your business in one way or another. Thus, you are wise to stay on top of current changes, so your business is not caught off-guard. Be prepared and attend an upcoming educational webinar to learn more:
Title: The Sales Tax Landscape is Shifting… Are you Ready?
Date: Thursday, June 13th, 2013
Time: 10 AM PT / 1 PM ET
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