STREAMLINED SALES TAX REGISTRATION

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OBTAIN A STREAMLINED | MULTI-STATE SALES TAX PERMIT

After starting a business, you may need to register and collect sales tax from states other than the one your business is primarily located in. This usually happens in one of two instances in which your business has economic sales tax nexus.

WHAT IS NEXUS?

This is where your business has sufficient economic connection to a state, and in turn, that state has the right to impose a sales tax liability on your business. The first situation arises if you have economic nexus by way of physical presence.

The following are the main criteria that will govern if your business has physical presence within a given state:

  • The business’s primary location (online store, storefront, office etc.) where it conducts operations is located within your home state
  • The ownership or staff of the business (including sales people, contractors or agents) enter that state to conduct business activities
  • Personal property owned or leased is warehoused in that state
  • You sell products for shipment within that state (intrastate commerce)
  • You want to hire employees or contractors in that state
  • You own a wholesale company that sells products for resale use in that state (in most wholesale trade shows and markets it will be required to provide a Sales Tax Permit Number in order to participate)

WAYFAIR DECISION

The second situation arises if you have economic nexus by way of “Remote Seller Nexus”. A remote seller is any individual or business that sells taxable products or services through telephone, mail order, or the internet. A remote seller does not need to have physical presence in a state, but instead meet specific sales and/or transactional thresholds. This nexus stems from the Supreme Court ruling in South Dakota vs. Wayfair. In the Wayfair decision, the Supreme Court ruled that any entity that meets remote seller thresholds must register for and remit sales tax.

The following are the main criteria that will govern if your business has remote seller nexus within a given state: Based on the Wayfair decision, South Dakota passed a remote seller nexus threshold of $100,000 in taxable sales or 200 separate transactions in the preceding or current calendar year. An example of this is if you sold Rolex watches through Amazon, Etsy or Ebay. If you sold 100 watches (each in a separate transaction) for $1000 each (totaling $100,000) then you would meet the remote seller nexus threshold based on sales volume. Therefore, you would be required to register and remit sales tax in South Dakota. Alternatively, if you sold 205 watches (each in a separate transaction) for $400 each (totaling $82,000) then you would meet the remote seller nexus threshold based on transactional volume. Even though you did not meet the sales volume you exceeded the number of transactions. With the exceptions of the states below, all states follow this $100,000 sales volume or 200 separate transactions threshold including the District of Columbia. The states of Alaska, Delaware, New Hampshire, Montana, and Oregon do not currently have a statewide sales tax

STATESALES VOLUMEAND/ORTRANSACTION LIMIT
Alabama $250,000 No transactions
Arizona $200,000 in 2019, $150,000 in 2020, $100,000 in 2021 No transactions
California $500,000 No transactions
Colorado $100,000 No transactions
Connecticut $100,000 AND 200 transactions
Idaho $100,000 No transactions
Iowa $100,000 No transactions
Kansas TO BE DETERMINED
Massachusetts $100,000 No transactions
Mississippi $250,000 No transactions
New Mexico $100,000 No transactions
New York $100,000 AND 100 transactions
North Dakota $100,000 No transactions
Oklahoma $100,000 No transactions
Pennsylvania $100,000 No transactions
South Carolina $100,000 No transactions
Tennessee $500,000 No transactions
Texas $500,000 No transactions
Washington $100,000 No transactions
STATESALES VOLUMEORTRANSACTION LIMIT
Arkansas $100,000 OR 200 transactions
District of Columbia $100,000 OR 200 transactions
Florida $100,000 OR 200 transactions
Georgia $100,000 OR 200 transactions
Hawaii $100,000 OR 200 transactions
Illinois $100,000 OR 200 transactions
Indiana $100,000 OR 200 transactions
Kentucky $100,000 OR 200 transactions
Louisiana $100,000 OR 200 transactions
Maine $100,000 OR 200 transactions
Maryland $100,000 OR 200 transactions
Michigan $100,000 OR 200 transactions
Minnesota $100,000 OR 200 transactions
Missouri $100,000 OR 200 transactions
Nebraska $100,000 OR 200 transactions
Nevada $100,000 OR 200 transactions
New Jersey $100,000 OR 200 transactions
North Carolina $100,000 OR 200 transactions
Ohio $100,000 OR 200 transactions
Rhode Island $100,000 OR 200 transactions
South Dakota $100,000 OR 200 transactions
Utah $100,000 OR 200 transactions
Vermont $100,000 OR 200 transactions
Virginia $100,000 OR 200 transactions
West Virginia $100,000 OR 200 transactions
Wisconsin $100,000 OR 200 transactions
Wyoming $100,000 OR 200 transactions

STREAMLINED SALES AND USE TAX AGREEMENT (SSUTA)

Sales tax is the second most broadly collected revenue stream at the state level, only second to income tax. Even though most states tax the same kinds of goods and services, the administrative procedures and protocols can vary drastically. These systems are governed by legislation that is over 80 years old. It was evident that new legislation would have to be passed to keep up with an ever-changing climate of technologically driven commerce. To keep up with this environment, a multi-state uniform sales tax agreement was put together in an effort to simplify the sales tax administration and collection process. Currently, about half the states in the US have joined the coalition. The following states are currently part of the uniform agreement: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.

The multi-state agreement is meant to benefit both member states and businesses that register to become part of it. From the states perspective, it makes sure that fairness is provided to local businesses and they are able to compete with out of state businesses. Alternatively, it is especially useful for businesses operating in multiple states or “remote sellers” who make sales in multiple states. Businesses can register in as many or as few member states as needed in just one uniform application. The application is a fast and efficient way to register to collect sales and use tax in member states. Once registered you will receive a single “Uniform Sales Tax Number” for use in all member states. It is the equivalent of having a universal seller’s permit (Sales Tax Permit) in all member states.

STREAMLINED SALES TAX REGISTRATION

It is strongly recommended that all new businesses that want to get registered in multiple states (that are included in the Streamlined Agreement), file for their streamlined sales tax number through a Multi-State Uniform Sales Tax Registration Application as it is the easiest and fastest way to apply. For the fastest processing time, please have the following information ready to complete the online application:

Business name, physical/ mailing address & phone number
A short description of the business
The owner or officer’s Information
Payment information

Register online for your Multi-State Uniform Sales Tax Permit and obtain your Uniform Multi-State Sales Tax Number (Multi-State Tax ID Number). After you complete the online process, you will receive a confirmation of all your important information within 1-2 business days.