What Is Wayfair Nexus?
- New Economic Threshold Rules
- The criteria for economic nexus
- A State-by-State Analysis of a Business's Sales
- A One Hour Consultation with Diane Yetter
- Explicit Economic Necessary Sales Tax Filing
- Is the Sales Taxed?
- The Case for a New Sales Tax Threshold
- The Physical Presence Condition for Income Tax
- A Note on the Sales Tax in Alabama
- An Economic Nexus
- The State-Dependent Tax Compliance Law
New Economic Threshold Rules
The new economic threshold rules indicate that the state's threshold is triggered when a sale is made. If there are no taxable sales in a state, the state may not need to register. Each period, a zero-dollar return would be filed because there is no minimum sales tax in any state. Many states will charge a late filing penalty even if there is no sales to report.
The criteria for economic nexus
Since the Wayfair decision, the criteria to determine economic nexus has changed. Gross sales and associated transactions were all that was needed to determine economic nexus. The unique landscape of remote sellers meant that many of them would not be subject to tax. The criteria for economic nexus is changing.
A State-by-State Analysis of a Business's Sales
Any business that sells outside of its home state should review its sales in each state to understand how it operates. Businesses need to shore up their documentation of exempt customers and gain an understanding of the taxability of their sales. Businesses in more than a few states that meet economic thresholds must seriously consider automation of the sales tax calculation and collection.
A One Hour Consultation with Diane Yetter
Diane Yetter, a sales tax expert, will answer your questions in a one hour consultation after you have analysis of your risk level. Diane has over 30 years experience in sales tax and can give you guidance.
Explicit Economic Necessary Sales Tax Filing
Some states are implementing the economic nexus sales tax filing requirements on October 1, while others are waiting until January 1, 2019. Many states have not provided any information about when enforcement will start. Prepare now for Wayfair.
Is the Sales Taxed?
Sales tax is a connection between a seller and a state that requires them to register. Certain business activities, such as having a physical presence or reaching a certain sales threshold, may establish a relationship with the state. The answer is no.
Walmart and Wayfair are two different brands. Different entrepreneurs founded each company. Walmart and Wayfair have the same first two letters of their names.
Is it legit? Yes, Wayfair is a legitimate company with safe practices. Customers can purchase home goods, furniture and appliances from one site with the help of the Wayfair.
The Case for a New Sales Tax Threshold
The Supreme Court decided on June 21, 2018, that sales tax collection would be changed by the case. South Dakota could impose its sales tax collection requirements on remote sellers without regard to their physical presence. The Supreme Court's 1992 decision in the case of Quill Corp. v. North Dakota, which required vendors to have physical presence in a state before they could collect and remit sales tax, was overturned by the decision.
The implications of the Wayfair decision to assist businesses with coming into and maintaining sales tax compliance in a postWayfair world is outlined in a practical guide. The fact that some states base their thresholds on the most recent year makes it difficult to figure out if the threshold is over or under. Some include both nontaxable and taxable sales.
It is possible that businesses had a relationship with states before the remote-seller standards came into play. Potential prior-period exposure may be larger than exposure related to remote-seller nexus. The earlier businesses act to determine where they may have a sales tax obligation, the more limited their potential exposure for prior periods will be.
There are a few ways to move forward if a business determines that it has a state that has not fulfilled its sales tax obligations. More states may offer an amnesty program in the future for businesses that may not have been able to register and begin filing by the effective dates, due to the number of states that have enacted remote-seller related legislation. Tax amnesty and voluntary disclosure programs give companies the chance to resolve prior-period exposures and begin fulfilling their sales tax filing obligations without worry.
The potential for an audit to last indefinitely is a deterrent, but it is also associated with sales tax noncompliance. Many states have criminal penalties for businesses that don't collect and pay sales tax. Criminal penalties are imposed on individuals who fail to file sales tax returns in some states, and personal liability is imposed on corporate officers in many states.
The Physical Presence Condition for Income Tax
The physical presence requirement for income tax has been moved away by states. Most states that have deviated from the physical presence requirement have either maintained a pre-Wayfair economic presence standard or implemented the postWayfair factor presence type test as part of the economic nexus standard. Taxpayers are confused about whether they are subject to income tax in each state, because of the complicated approach to an individual business.
A Note on the Sales Tax in Alabama
If a merchant sells into Alabama but does not have a tax relationship with the state, they can collect use tax and send it to Alabama customers. Alaska is a home rule state and does not have a state sales tax. If the merchant has a connection to the state, some local jurisdictions may charge a destination based rate.
An Economic Nexus
An economic nexus is a sales tax that is determined by the amount of sales you make in a state. Once your total sales reach a certain amount, any kind of economic activity could be considered a factor. Regardless of where you work, your business or warehouses are able to have an economic nexus.
The State-Dependent Tax Compliance Law
The requirements differ from state to state, depending on the amount of sales and transactions. Let's discuss some key terms and considerations to help you figure out if, when, and where you should file taxes. A company must be doing business in a state before it can be required to collect and remit sales tax there. "If you have an office, inventory, sales activity, or even an employee traveling into that state, that means you may have a connection to that state," she says.
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